Carney and Osborne are speaking this evening at 9pm at the annual Mansion House Dinner, the text of their speeches will be released four hours ahead of the speech and between the two of them there’s certainly potential for direct market impact. GBPUSD has formed an important technical pattern (inverse head and shoulders for those interested) that is a very strong indicator of higher rates for the pound against the dollar to come, and LON:RBS have piled in to a long position, expecting rates to surge to as high as 1.6430. Indeed, just overnight cable has surged back above 1.54, but sterling’s failure to make much headway against the euro belies the underlying cause as dollar weakness as opposed to sterling strength.
Stocks faltered and closed the day pretty much flat, forming yet more worrying technical signals that a longer term reversal is building. US household consumption has remained weak despite continued improvement in the labour market, and this divergence is helping cause volatility in the dollar as traders change their minds over which of the two metrics to hang their hat, and take positions on. It’s exacerbated by developments in Greece, with many institutions unwilling to take positions until the issue is resolved, causing some droughts in liquidity and leading to some pretty violent price swings.
Tsipras continues to meet with Merkel and Hollande in an attempt to thrash out a deal. The euro is in limbo, waiting to see which way the cookie crumbles. A Greek spokesperson said that their priority is to sort out a “medium term” solution. In other words, they know they can’t be fixed permanently and just want to do what it takes to get into more debt to pay off their old debts, and down the line it will be someone else’s problem. Despite the obvious temporary nature of any solution, signs of progression towards some sort of deal will be significantly beneficial to the single currency.
The yen was one of the strongest performers overnight, after governor Kuroda said it was “hard to see the currency’s real effective rate falling further”, adding that it can’t be assumed that the yen will weaken following a Fed interest rate hike.
The Aussie dollar was hit hard, after the RBA released a statement saying that it would be “some time” before a rate hike.
Telegraph – HSBC brand to disappear from UK’s high streets as bank renames branches.
Independent – Britain’s £100bn-a-year money-laundering problem: out of 14,000 tip-offs, police acted forcefully on seven.
Pound Sterling, Euro Currency, US Dollar exchange rate commentary is provided by Argentex (Ag-Fx.com)