Sterling takes another bath


US retail sales went up by 0.4% in June, both with and without motor cars. Sales for the control group, which figures in the personal consumption expenditures calculation, were up by 0.7%. Import and export prices were both lower on the month, imports by 0.9% and exports 0.7%. The NAHB Housing Market Index rose by an unexpected point to 65. Industrial production was less impressive: it was flat in June, as a decline in utilities offset increases for mining and manufacturing.

The political news was not helpful. The president said there is still "a long way to go" on the path towards a trade deal. He also spoke of imposing tariffs on a further $325 million of Chinese imports. Even so, the USD was the top performer among the major currencies.


The EU did what it does best, finding a compromise that no member state much likes but to which none takes violent exception. The compromise yesterday was confirmation of a successor to Jean-Claude Juncker as president of the European Commission. German defense minister Ursula von der Leyen got the job, with a narrow majority of 383-327 in the European Parliament. She will take up her new post on November 1.

Italy opened Europe's ecostat account this morning with monthly increases of 2.5% for industrial orders and 1.6% for industrial sales. Euro zone construction output fell by a seasonally-adjusted 0.3% in May. The consumer price index data were higher than forecast, with headline inflation ticking up to 1.3%. The numbers had no effect on the EUR, which is 0.3% lower on the day.


Foreign investors acquired $10.2 billion of Canadian securities in May, following two months of divestment. At the same time, Canadian investment in foreign securities resumed to reach $4.1 billion, led by purchases of US corporate bonds. As a result, international transactions in securities generated a net inflow of funds of $6.1 billion in the Canadian economy in May to total $34.2 billion in the first five months of 2019.

The main factor for the CAD was oil prices, with WTI crude eventually off by 3% after a sharp downward move in the middle of the New York session. The Loonie approximately followed its path but managed to escape unscathed. It is unchanged against the USD.


Investors completely ignored a perfectly decent set of UK employment data  on Tuesday. All they cared about was the nihilistic tone of the debate between Conservative leadership hopefuls Jeremy Hunt and Boris Johnson. Their recent hustings seem to have revolved around which of them can deliver a harder and swifter Brexit, and neither is inclined to accept the political reality of the EU's position. It makes investors nervous that the winner might actually practise what he preaches.

It was a similar story with this morning's UK consumer price index data. The headline inflation figure was exactly as expected; unchanged on the month at 2.0%.  It did sterling no good whatsoever. The GBP is 0.5% lower on the day against the USD and in last position among the major currencies. 


It was another data-free day in Tokyo. Investors tried to make something out of the US president's tariff threat but were unable to make it stick.

The JPY is 0.2% lower against the USD.

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