Sterling cracks a fresh 2019 low this morning as the BRC Sales Monitor for June slashes one of the final legs of support for the UK economy – consumption. The BRC measures the total value of retail products sold, which shrank by 1.6% in June, and points to a third consecutive contraction in the official ONS release of retail sales volumes for the month. A deterioration in the consumer sector adds to the downturn in last week’s PMI releases and cements the likelihood of the UK economy contracting in Q2. The question now is how the next Tory leader, which remains undecided for another fortnight, will break the political impasse in Westminster under an economy which is screaming for a break in the blanket of uncertainty. Fittingly in this scenario, it has been a year since Boris Johnson resigned as Foreign Secretary. Elsewhere, Trump has vowed to never do business with Britain’s US Ambassador Kim Darroch after his true opinion of the US President was leaked and slapped across the Sunday periodicals. From one disaster to another, back to the Tory leadership contest. Both contenders will partake in the only televised head-to-head debate tonight on ITV1 at 20:00 BST, with Boris supposedly winning in the polls. Boris must tread carefully to cement his lead as televised debates haven’t been his forte in the contest thus far despite his flamboyant personality.


A two-and-a-half week low, that’s what the start of the week brought to the single currency on EURUSD. A minor miss in German May Industrial Production at +0.3% in May and the French European Central Bank member Francois Villeroy de Galhau who said the ECB has the “determination and capacity to act as needed”, were enough together to drench the euro in a sombre mood. Meanwhile, it rumbled on the edges of the Eurozone as Turkey’s central bank president Murat Cetinkaya was replaced by Murat Aysal on the orders of Turkey’s President Recep Erdogan. Further concerns about the independence of Turkey’s central bank led to the August 2018 lira crisis, which rippled through in added uncertainty for European banks. The risk of contagion from this source through the entire European banking sector appeared contained last year, but we’ll continue to monitor how adverse developments in the Eurasian bridge country can potentially hamper the Eurozone. Italian Retail Sales are scheduled today at 9:00 BST.


The dollar continued its run yesterday smashing every G10 currency in its way as optimism spilt over from last week’s NonFarm Payroll release. Fixed income markets did the heavy lifting for markets, with the whole of the US treasury curve rising. Investors continued to downgrade their expectations of how far the Fed cutting cycle would go, albeit only marginally, but in a day with limited newsflow, the move was sufficient for the dollar to reign supreme. At 11:00 BST today the NFIB Small Business Optimism survey will be released while markets continue to trade in a   mood as Powell’s testimony looms on the horizon.


Loonie price action has an air of consolidation this morning, as USDCAD has risen some 0.6% from last Thursday’s year to date lows. A couple of bits of data will be out today in the form of Housing Starts at 13:15 BST and Building Permits at 13:30, but with the Bank of Canada due to meet tomorrow, the impact of the releases is likely to be muted.