There’s barely anything of note due from the UK this week – Preliminary GDP tomorrow and Net Lending to Individuals on Wednesday. We don’t really know whether no news is good news or bad news, although logically either way the pound will remain at the whim of US and Eurozone data, of which there’s plenty. Danske and Credit Suisse are long the pound against the dollar, expecting 1.5701 and 1.5845 respectively, whilst Credit Agricole remains short, targeting 1.4850. Morgan Stanley are still holding their position against the euro, expecting 1.51+.
The dollar struggled slightly as short-term yields declined in a hint that positioning may show backtracking in yield expectations. Durable Goods Orders are expected to show the strongest uptick for three months, and US data (in contrast to UK data) has on average beat expectations so there remains room for an upside surprise, which would increase the likelihood of a September rate hike and so help boost the dollar. Consumer Confidence due tomorrow will be important, not only as it’s the only data point due from the US, but also because of the reliance on the consumer spending their way out of recession in America. There’s unlikely to be much heavy positioning ahead of Wednesday’s FOMC Statement at 7pm, when although there’s very little chance of an actual rate hike we may start to hear language hinting at imminent rate rises.
Moves late last night in EURUSD have taken out some stops in many of the short positions that had been placed over the last few days, and they’re unlikely to be put back on until at least after the FOMC announcement on Wednesday. Having said that, Morgan Stanley, NAB, Danske Bank and Barclays all still hold positions, expecting between 1.02 and 1.05. Not really market moving, but amusing nonetheless, a report over the weekend said that senior Greek officials within the Syriza Party planned on raiding central bank reserves to prepare for a return to the Drachma. With Greece out of the way, data from the Eurozone may start to have more of an impact, and with that in mind this week we have CPI and GDP numbers from various Eurozone regions as well as German Consumer Climate.
Telegraph – Varoufakis awaits treason charges.
Independent – Amazon now worth more than Walmart.
FT – Salmond says second referendum inevitable.
Pound Sterling (GBP), Euro Currency (EUR), US Dollar (USD) exchange rates commentary is provided by Argentex (Ag-Fx.com)