It was another day, another fresh low for sterling yesterday, as news headlines continue to serve a menu of Brexit pessimism. Among yesterday’s discussion items was a note by Morgan Stanley analysts, warning that sterling would fall to parity against the US dollar in the event of no-deal Brexit. Today at 09:30 the Office for Budgetary Responsibility will release an assessment of the economic impact of no-deal Brexit in October. The Times is reporting that the assessment will warn of a recession in the event of no-deal Brexit, a credible conclusion considering recent survey data suggesting the economy contracted in the second quarter. Elsewhere, Boris Johnson waved a packaged smoked kipper around during the final Tory leadership hustings last night. The likely next Prime Minister used the fish as a prop to argue that after Britain left the EU, Britain would be able to end damaging regulatory overkill of the sort that required smoked kippers to be sent in ice pillows.


After two days of losses incurred against USD the euro appeared to enjoy the Summer doldrums for a change as the single currency strengthened marginally against the dollar on an uneventful trading day. A slightly higher Final June Consumer Price Index at 1.3% was a crumb for the euro to feast on, while the rest of yesterday’s data further storms may be to come. Eurozone May Construction sector Output fell by 0.3% month on month in May, while some nasty revisions in the April data brought the year-on-year growth figure down from 3.1% to 2.0%. Even if we see a modest increase in June construction activity likely fell in Q2, cancelling out the 1.9% jump in Q1, providing yet another drag on Eurozone Q2 growth. Also, the narrative that consumers may pick up the flag and valiantly stride towards boosting the economy based on real wage growth and high consumer optimism, is questioned by the latest big ticker consumer data. Car registrations plunged by 7.8% year on year in June. Even when base-effects are taken into account this goes to show that Eurozone consumers aren’t yet dashing out of their houses to splash the cash on large purchases.Today brings day 2 of the G7 meeting in Paris as the sole highlight of the calendar.


After a sturdy Tuesday greenback found itself near the bottom of the G10 FX pack yesterday with Housing Starts dropping as a potential driver for this. June Housing starts fell by 0.9% to 1.253K marginally lower than the consensus. Building Permits dropped 6.1% and weren’t even near the consensus at 1.220K. This appears bleak, as especially as Building Permits usually lead Housing Starts and are less susceptible to adverse weather conditions. However, zooming in deeper into the data reveals that mostly the volatile multi-family permits dragged down the headline, while the less volatile single-family permits continued to rise by 3.5% annualized. As the national average 30 years mortgage rate dropped 100 basis points since November demand for Building Permits will likely rise coming months.Today sees the Unemployment Claims at 13:30 BST, followed by the CB Leading Index at 15:00 BST.


The loonie began yesterday on the back foot, but quickly regained momentum and regained much of its losses from Tuesday night, pausing only briefly in the afternoon following the release of inflation data in the afternoon. June’s data showed a moderation in inflation, with headline CPI slowing to 2% as expected, reflecting both lower gasoline prices and lower core inflation. Today at 13:30 BST, ADP will release its estimate of Canadian job creation.