What’s been happening?

Pound Sterling – UK Markets 

The British pound closed the day modestly lower against both the dollar and the euro as the currency struggled to find demand amid the political uncertainty and the lack of positive macroeconomic data releases from the UK.

On Thursday, Boris Johnson, the front-runner to replace Prime Minister Theresa May, argued that it was ‘very, very unlikely’ that parliament would extend the Brexit deadline again. Meanwhile, Senior Conservative lawmaker Ken Clarke told reporters that he will vote for an attempt next week to block Britain's new prime minister leaving the EU without a deal. The amendment is aiming to stop funding of government departments in case the event of a hard-Brexit. Commenting on that issue, "any attempt to deny vital funding to Whitehall departments would be grossly irresponsible,” said Prime Minister May’s spokeswoman. “This is government spending for this financial year and funds crucial areas like schools, housing and welfare."       

US Dollar – US Markets

For the second straight day, the US Dollar Index failed to determine its next short-term direction. Today’s data from the U.S. showed that according to the Bureau of Economic Analysis’ third estimate, the real GDP expanded by 3.1% on a yearly basis in the first quarter to match the previous estimate and the market expectation. Other data revealed that the number of citizens applying for unemployment benefits rose to 227,000 in the week ending June 21 while pending home sales increased by 1.1% on a monthly basis in May following April’s 1.5% contraction.

In the meantime, investors are paying close attention to headlines surrounding the U.S.-China trade conflict ahead of the critical meeting between Donald Trump and his Chinese counterpart Xi at the G20 summit this weekend.

Earlier today, the Wall Street Journal reported that China was planning to require the U.S. to lift the ban on Huawei as a precondition of a trade deal. Later in the day, White House economic adviser Kudlow told Fox News that there were no preconditions in trade talks with China. On a similar note, a senior Trump administration official told Reuters that it was unlikely for the U.S. to lift the restrictions on Huawei. On the other hand, Chinese news outlet Global Times claimed that analysts called President Donald Trump’s latest threat to impose new tariffs a bullying tactic and said that this would have a negative impact on this weekend’s critical negotiations. Waning trade optimism weighed on the 10-year Treasury bond yield and made it difficult for the USD to gain traction.

Euro – European Markets

Despite the disappointing sentiment data, the shared currency stayed resilient against its major rivals on Thursday. In its latest business and consumer survey, the European Commission revealed that Consumer Confidence Index fell to -7.2 in June from -6.5 in May and the broad Economic Sentiment Indicator edged down to 103.3 from 105.2 to fall come in worse than the market expectation of 104.6. Further details of the report revealed that both the Industrial Confidence and Services Sentiment continued to worsen in that period. 

On the other hand, the data published by the Destatit showed that inflation in Germany, as measured by the Consumer Price Index, rose to 1.6% on a yearly basis in June from 1.4% in May to revive hopes of inflation finally showing some signs of life in the eurozone.  

What’s coming up? 

UK: The UK’s Office for National Statistics will release the GDP growth data for the first quarter, which is expected to come in at 0.5% on a quarterly basis. The report will also include the total business investment and current account figures.

US: The Fed’s preferred gauge of inflation, the Personal Consumption Expenditure (PCE) Price Index, will be watched closely by participants. 

EU: The Eurostat will release the inflation data for the euro area on Friday. The annual core Consumer Price Index, which excludes volatile food and energy prices, is expected to improve to 1% in June from 0.8% in May.