What’s been happening?

Pound Sterling – UK Markets 

UK pay growth slowed to a 6-month low in July, the Office for National Statistics said this morning. Average weekly earnings rose by 2.5% on the year in the three months in May, slowing in speed from the previous three-month period when they grew by 2.6%. Pay growth, excluding bonuses, slowed by a similar amount to 2.7%. However, both readings were in line with the average forecast. The unemployment rate remained at its joint-lowest since 1975 at 4.2% while the proportion of people in work rose to a record high of 75.7% following 137,000 jobs being created over the three months to May.

“We’ve had yet another record employment rate, while the number of job vacancies is also a new record. From this, it’s clear that the labour market is still growing strongly,” ONS statistician Matt Hughes said. Although slowing in British workers’ pay growth may be adding to the Bank of England’s conundrum as it considers whether to raise interest rates in August. The Pound was quoting a disappointing 1.1295 against the Euro amid the release of fresh employment data.

US Dollar – US Markets

Headline US retail sales data released yesterday showed a 0.5% increase and was in line with consensus expectations while underlying sales rose 0.4% and there was a significant upward revision of 1.4% to May’s data. This leaves consumer spending up by 5.9% when the second quarter is compared with sales for the same period one year ago. 

The New York Empire manufacturing index fell 2.4 points in July to a reading of 22.6, although was still above consensus forecasts, the New York Federal Reserve reported yesterday. There were signs of capacity pressures easing slightly as unfilled orders held steady and pricing pressures also eased marginally. The US Dollar steadied following positive Empire State Manufacturing index and fresh retail sales data, which suggested a continued robust performance from the US economy during Q2. 

Euro – European Markets

The Euro gained slight support yesterday after optimistic statements made at the EU-China trade summit helped ease trade fears. At the Summit, the EU and China confirmed their firm support to the rules-based, transparent, non-discriminatory, open and inclusive multilateral trading system with the WTO as its core and committed to complying with existing WTO rules.

Italian Deputy Prime Minister Matteo Salvini said yesterday at a press conference in Moscow, that he will push the European Union to ease sanctions on Russia and threatened to block the EU’s agenda if he doesn’t get his way. “We are giving the European Union a last chance to continue to exist as it is,” Salvini stated, however, he also added that Italy is not seeking an exit from Europe’s currency union.

EU Affairs Minister Savona stated that ECB should be the lender of last resort for the Eurozone and that Italy should be given permission to increase fiscal investment. Italian bonds strengthened amid latest comments and there was a net Euro benefit into the New York open with Euro quoting 1.1731 against the US Dollar.

What’s coming up? 

UK: Markets will be looking to Consumer Price Index for the month of June released tomorrow morning. June Retail sales data will be out Thursday. 

US: Federal Reserve Chairman Jerome Powell will be speaking this afternoon and tomorrow, housing data for the month of June will be out tomorrow.  

EU: Markets will be looking to Eurozone Consumer Price Index for the month of June released tomorrow.