Schlagwort-Archiv: GBP
Euro steadies itself with ECB in focus tomorrow
Despite the dollar being firmer today, the euro is the exception as markets continue to aggressively price in ECB rate hikes. As things stand, money markets have priced in odds of 75 bps worth of rate hikes by September as compared to the 70 bps on Friday. Meanwhile, odds of a 50 bps rate hike in July is pretty much a coin flip.A lot will depend on the ECB language tomorrow to determine how aggressive or justified the market pricing currently is.I’m on the camp that markets have gone a little too far in pricing ECB hawkishness, especially considering the economic headwinds.It’s a tough one for policymakers when they are getting so little help from lawmakers in the inflation battle but rate hikes aren’t the solution. We’ve known that for a while already and so does Lagarde & co. surely.Anyway, the euro is pretty much waiting in line for a fresh catalyst to break on either side against the dollar. The ECB might offer some clues tomorrow, so keep your eyes and ears peeled for that.
Eurozone Q1 final GDP +0.6% vs +0.3% q/q second estimate
Dollar gains in European morning trade
Elsewhere, the greenback is also posting modest gains with the sluggish risk mood seeing the aussie and kiwi punished the most.
EUR/USD is down 0.2% to 1.0675 as the push and pull continues ahead of the ECB. Meanwhile, GBP/USD as backed off the highs near 1.2600 to fall towards 1.2520 levels at the moment. The daily support levels below will be ones to watch:
That being the 38.2 Fib retracement level at 1.2471 and the 1 June low at 1.2458. Those are key levels to watch on the daily close to see if sellers have the appetite to go chasing for the next leg lower.
Besides that, AUD/USD is down another 0.6% to 0.7180 upon a rejection of its 100-day moving average:
Sellers are wrestling back for near-term control below the 200-hour moving average at 0.7194 but the minor support region around 0.7145-60 will be one to watch to see if the downside momentum will extend further.The more sluggish tones in the aussie and kiwi aren’t helped by the softer risk mood with European indices posting slight losses now with US futures also still pointing lower. S&P 500 futures are down 0.3% still at the moment.
UK May construction PMI 56.4 vs 56.6 expected
That’s the softest reading since January as the weakest rise in residential work for two years holds back construction activity last month. Companies mentioned that rising borrowing costs and heightened economic uncertainty were all likely to act as headwinds to client demand in the next 12 months. S&P Global notes that:
„May data signalled a solid overall rise in UK construction output as resilience across the commercial and civil engineering segments helped to offset weakness in house building. Residential construction activity was close to stagnation in May, which represented its worst performance for two years amid signs of softer demand and a headwind from low consumer confidence.
„New order volumes expanded at the slowest pace since the end of 2021, which added to signs that heightened economic uncertainty has started to impact client spending. Concerns about the business outlook were signalled by a fall in construction sector growth projections to the lowest for more than one-and-a-half years in May. Around 19% of construction firms predict an outright decline in business activity during the year ahead, up from just 5% at the start of 2022.
„On a more positive note, supplier delays subsided in May, with the latest downturn in performance the least marked since February 2020. Meanwhile, rapid price pressures persisted due to rising energy, fuel and staff costs, but the overall rate of inflation eased to a threemonth low in May.“
ForexLive European FX news wrap: Dollar holds firmer, RBA hikes by 50 bps
Risk stays on the defensive ahead of North American trading
Japan economy minister says closely watching impact of FX moves on the economy
GBP/USD runs into familiar resistance in choppy start to European trading
Eurozone June Sentix investor confidence -15.8 vs -20.0 expected
Euro area investor morale rose more than expected – the first increase since the Russia-Ukraine conflict – but the dour economic tone continues to reverberate for the time being amid supply issues and inflation. The current conditions index was seen at -7.3 in June, a slight improvement from the -10.5 reading in May.
Sentix notes that:
„As impressive as the improvement in the situation and expectations values may appear at first glance, this is unlikely to mark a turnaround. While consumers are already suffering from rising prices, many companies have been able to pass on their sharply rising costs to their customers and benefited from people rushing to buy goods and services before price increases. However, this phase looks set to finish as end consumers will have to cut back at some point, and monetary policy could become more restrictive from July.“