Sterling Climbs Before Thursday’s election
The sheer number of mixed election polls saw the Pound stumble yesterday, with some predictions giving the Conservative leader Theresa May an 11-point lead and others forecasting only a 1-point lead. This morning, however, the Pound rallied from its slump against the majors quite significantly as more and more polls pointed to a safe Conservative majority.
Domestic data yesterday from the British Rail Consortium revealed that May’s UK retail sales had shrunk by -0.4%, with the BRC noting that online sales had also slowed by -4.3% following a 13% expansion the previous year. Analysts blame stagnating wage growth and rising inflation for these somewhat poor figures, but with all focus on the election, Sterling did not fluctuate substantially with their release.
Friday will see the release of April’s Industrial Production report. This release could prove significant in the short term in analysing and predicting the strength of overall GDP, as production within this sphere accounts for a significant amount of its volatility.
Pound Fluctuates against the Euro as Election Jitters Soften
Despite yesterday’s slump against the Euro the Pound today has rallied somewhat as election jitters weighing on the Sterling exchange rates abated somewhat.
Eurozone data releases were predominantly positive yesterday: May’s Sentix gauge for Eurozone investor morale reached a 10-year high at 28.4, and the single currency also managed a 2.5 increase in Eurozone retail sales – forecast at only 2.1%.
US Dollar Fluctuates Ahead of UK Election and James Comey Testimony
Today the Pound has rallied against the US Dollar, as increasing numbers of polls and analysts claim a Conservative majority is likely.
The big data sets for the US Dollar today will be the Crude Oil Inventories release, the MBA Mortgage Application report, and the Consumer Credit report. In regards to oil, Brent crude oil prices have dropped back down to below $50 a barrel in reaction to the over-saturated market, but also in anticipation of the release later today, which analysts are predicting will cause prices to fall further.
There was good data news for the ‘Greenback’ yesterday, however, as the new US job opening figures increased to an all-time high of six million. Respectively, hiring decreased to 5.1 million, a difference that shows conditions in the US labour market could be narrowing. Keep an eye on the US Federal Reserve’s response to this, as they may be tempted to hike interest rates.
The UK election will be the focus today and tomorrow, similarly, former FBI Director James Comey will be testifying to the senate on Thursday, an event that could have implications for the USD.
Oil Surplus Woes Continue to Weigh on the Canadian Dollar
Today the Pound has grown significantly stronger against the Canadian Dollar, despite yesterday’s dip. This can primarily be attributed to the ‘Loonie’ having its own troubles following the geopolitical insecurities regarding Qatar and the energy sector, and the increasing number of polls placing the Conservatives within comfortable chance of a majority lead.
Further plaguing the Canadian Dollar is the news that Nigeria and Libya – two countries that are actually exempt from the OPEC deal, have been increasing their oil production, (Libya’s output has again risen to over 800,000 barrels a day). Goldman Sachs acknowledged this issue in a research note, saying:
‘While we remain cautious on factoring in such a recovery in production given the ongoing local tensions, these combined volumes could largely offset the benefit of the extended cuts…’
With many analysts worried that the oil market will remain over-saturated with supply, the forecast for the CAD remains somewhat rocky.
Positive GDP Release Gives the Australian Dollar a Significant Boost
The ‘Aussie’ hit a one month high on a trade-weighted basis today (and is still rising against all majors) following the release of somewhat positive GDP data. The release, from the Australian bureau of statistics, revealed growth of 0.3% over this year’s first three months – this was as forecast, with a year over year growth of 1.7%, higher than the forecast of 1.6%.
The Pound fell yesterday against the AUD and continues to do so, primarily on the back of election tensions within the UK and the success of the Australian GDP report.
Higher than Previous Year Dairy Auction Means Good Things for New Zealand Dollar
The results of yesterday’s New Zealand dairy auction were better than previous, with the winning price coming in at $3395 (previous $3313). This news has driven up the price of the New Zealand Dollar against most majors, including the Pound, which has been meandering up and down against yesterday’s pit of 1.8792.
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