The pound is slightly weighed down this morning due to a mild USD bid across the board. While headlines revolved around the government’s abandonment of the vaccine passport programme after Health Secretary Sajid Javid announced the news live on BBC news, events over the weekend pose little market impact. This week is fairly full with data releases, which are likely to be more instrumental for GBP. July’s employment data kick starts the week’s events tomorrow, with August’s CPI data due out on Wednesday. However, Friday’s release of August’s retail sales data is likely to be the piece of economic data that is most impactful for markets, especially as near-term spending measures signal conflicting signs.
The euro started the week off lower across the majority of the G10 due to a combination of USD buying and a better offered euro after yesterday’s televised election debate for Germany saw the three candidates for chancellorship convening for one final showdown before the elections. A poll conducted right after the debate saw that 41% of viewers viewed Social Democratic Candidate Olaf Scholz as most convincing, while 27% thought the same for the CDU’s Armin Laschet vs 25% for the Greens’ Annalena Baerbock. Scholz’s popularity received a boost after Scholz responded well to attacks from conservative Laschet who turned his fortunes around attacking Scholz over his track-record on money laundering and corruption. The focus this week turns to European Central Bank speakers, with Isabel Schnabel and Philip Lane on the agenda for today and Wednesday respectively. Both are typical doves at the central bank, however Lane expressed his concerns around rising inflation just a week before the ECB announced it will moderate purchases through its pandemic QE programme, indicating that his Wednesday speech could include some hawkish twists as well.
The dollar starts this week with a mild haven bid against the majority of G10 and EM currencies as data over the weekend points towards rising cases in parts of the state of Victoria (Australia), Auckland (New Zealand), and Putian (China). Treasuries open this morning marginally higher at the front-end, but have failed to follow the general move higher across the back-end with eurozone and Asian 10-year yields rising this morning. This highlights part of the haven bid, as investors continue to remain heavily invested in the safest bonds despite the recent improvement in the macro risk backdrop. This week, the data calendar starts on a light footing for the US dollar, but picks up as of tomorrow with the first inflation data for August. Meanwhile, the central bank calendar is light as the Fed enters its media blackout prior to its meeting on September 22nd.
The Canadian dollar remains on the back foot this morning amid a mild and broad bid in the US dollar, despite WTI rising back above the $70 handle as signs from US-Iran talks suggest it is unlikely that Iran’s oil supply will return to international markets. This week, the loonie’s focus is likely to shift towards the upcoming election as campaigns enter their final week, with polls suggesting that Conservative leader O’Toole remains the front runner. Outside of politics, the loonie will likely be impacted by August’s CPI data on Wednesday, especially following the Bank of Canada’s latest decision to press pause on tapering its QE programme.