Morning Report: 11 July 2017

11th July 2017 By: Ranko Berich

GBP Very little volatility in the pound yesterday in the absence of any headline data, and despite a number of political developments. Most prominently, we saw the rejection of UK Prime Minister Theresa May’s initial offer on European Union citizen’s rights by senior Members of European Parliament including Guy Verhofstadt, the senior co-ordinator for Brexit. Elsewhere on Monday, Theresa May’s spokesperson said that the European Court of Justice could retain jurisdiction over elements of British law during a transition period for Brexit, in an apparent concession to a likely European demand in negotiations. This morning’s data has included a strong print for the British Retail Consortium’s Retail Sales Monitor, which rose 1.2% year on year. The index tracks same store sales value, and suggested that warm weather and higher food prices may caused a pickup in retail sales in June. Today at 11:00 BST the Monetary Policy Committee’s Andy Haldane will speak, followed at 12:00 by his colleague Ben Broadbent.

EUR The euro took a marginal hit against USD yesterday, despite a firm print for the Sentix Investor Confidence Index, which remained at a high level for the July edition of the survey. Today at 09:00 BST Italian Industrial Production figures will be released, amid a sparse day for the euro data calendar.

USD USD is trading slightly up this morning compared to yesterday’s open, after a relatively uneventful day yesterday. Political developments remain front and centre for the United States this week, as Republican lawmakers grapple with passing controversial healthcare legislation that has been assessed as leaving millions without access to healthcare. The subtext of the current legislative battle is the prospect of tax reform – if the Republicans can’t pass their long-promised replacement for Obamacare, the prospect of substantial tax reform seems distant. Today at 11:00 BSTthe NFIB Small Business Index will be released, followed at 15:00 by the Job Opening and Labour Turnover Summary, an increasingly important measure of how tight the labour market is growing. At 17:30 influential Federal Reserve policy maker Lael Brainard will speak in New York, on the potentially incendiary topic of balance sheet normalisation.

CAD The loonie saw a spot of intraday weakness that proved very short lived yesterday, and as of this morning is trading only slightly over yesterday’s open. No data of note was released yesterday, but today at 13:15 BST monthly Housing Starts will be released.

UK news

  • FT. Trump Jr was told of Russian plot to boost father’s campaign. Email said damaging material on Clinton was part of Kremlin effort to sway election. Donald Trump Jr met a Russian lawyer last year expecting to receive damaging information about Hillary Clinton after being told in an email that the material was part of Moscow’s efforts to boost his father’s presidential bid. As Donald Trump was closing in on the Republican party’s nomination, the candidate’s son received the email from Robert Goldstone, a public relations executive and former British tabloid journalist, according to Alan Futerfas, a New York lawyer representing Mr Trump Jr.
  • Reuters. UK shoppers spend more on essentials as inflation rises. British households spent more money on food and other essentials last month but held back on less urgent purchases as they faced rising prices, two sets of industry figures showed on Tuesday. The data is likely to add to concerns that consumer demand has slowed further after a weak first quarter, as the effect of the fall in the pound after last year’s vote to leave the European Union increasingly makes itself felt. Payments company Barclaycard said year-on-year consumer spending growth slowed to a 15-month low of 2.5 percent in June from 2.8 percent in May, as spending on household goods and entertainment slowed. The British Retail Consortium said its measure of retail spending growth rose to 2.0 percent last month from 0.2 percent in May, above its average of 1.4 percent in the past six months.