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    Pound takes off after Carney hints rate hike could be sooner-than-anticipated

    GBP

    The pound shrugged off lower-than-expected inflation data on Tuesday and rose against most counterparts after the Governor of the BOE, Mark Carney said: “the point at which interest rates may begin to rise is moving closer given the performance of the economy.”

    The governor noted wages were “beginning to rise,” and urged households to “manage their finances.” His comments led to widespread speculation a rate hike might be sooner than previously thought.

    The comments came after sterling had taken a dip following the release of June CPI, which had shown no rise (0.0%) mom when a 0.1% increase had been forecast, and May had shown a 0.2% rise. Year-on-year there was also no increase, in line with analyst’s estimates from 0.1% a year ago.

    Core CPI, meanwhile, increased by 0.8%, from 0.9% in 2014 when it had been estimated to rise 0.9%.

    USD

    The dollar weakened on Tuesday after Retail Sales unexpectedly fell in June. The data showed a -0.3% decline which compared to the 1.0% rise in the previous month.

    Annually it rose 1.4% – the lowest since November 2009.

    Retail Sales excluding cars also fell, dropping -0.1% in June compared to a 0.8% rise in May.

    Seven out of the 13 categories in the report declined; the largest of which was Furniture (-1.6%) followed by clothing and footwear (-1.5%), building materials and garden equipment (-1.3%) motor and vehicle dealers (-1.1%), department stores (-0.6%), online stores (-0.4%), restaurants (-0.2%) and grocery stores (-0.2%),

    The sectors which showed growth in sales were as follows: electronics and appliances rose 1.0%, gasoline stores sales rose 0.8%, General Merchandise store sales rose 0.7%, those in sporting goods, hobbies, music and books, inched up 0.1%.

    Other data out on Tuesday showed a fall in Small Business Optimism to 94.1 from 98.3 and Business Inventories rising by 0.3% as forecast.

    EUR

    The euro traded mixed on Tuesday after the release of mixed data.

    The Euro-zone ZEW sentiment survey in July dropped to 42.7 from 53.7 previously. Nevertheless the data overall was read as reasonably positive, especially for Germany where there had been fears a contraction might be underway.

    The German ZEW (current situation) rose to 63.7 from 62.9 when analysts had been expecting a fall to 60.0.

    German Economic Sentiment, however, fell to 29.7 from 31.5 when it had been estimated to come out even lower at 29.0.

    The president of the ZEW institute, Professor Fuest said that neither the concerns over Greece nor the stock-market collapse in China had affected the outlook for the financial experts interviewed in the survey.

    Other data showed German CPI at 0.3%, as expected, and 0.1% E.U Harmonised – also as forecast.

    Industrial Production data, however, rose to 1.6% in June from 0.9% previously, although this was below the 2.0% expected.

    JPY

    The yen weakened in trading on Tuesday as the currency lost its safe-haven appeal with the worst-case-scenario of Greece exiting the euro seems to have been averted. In the second half of the London session the yen was trading at 123.35 per dollar.

    Japan’s Industrial Production surprised to the downside in May, questioning the nation’s ability to sustain a healthy growth pace in the second quarter. Total output of Japan’s mines, manufacturers and utilities dropped 2.1% on month in May, according to the final data from the Ministry of Economy, Trade, and Industry .Measured in annual terms industrial output declined 3.9% in the reported month compared with the 0.1% in the reported month.

    Meanwhile a survey of Japan’s large-scale manufacturers showed that activity rose in the June quarter, adding to signs that the economy is in much better shape after last year’s recession, prompting Prime Minister Shinzo Abe to declare ” Abenomics is in fact picking up acceleration”

    GBP

    The pound shrugged off lower-than-expected inflation data on Tuesday and rose against most counterparts after the Governor of the BOE, Mark Carney said: “the point at which interest rates may begin to rise is moving closer given the performance of the economy.”

    The governor noted wages were “beginning to rise,” and urged households to “manage their finances.” His comments led to widespread speculation a rate hike might be sooner than previously thought.

    The comments came after sterling had taken a dip following the release of June CPI, which had shown no rise (0.0%) mom when a 0.1% increase had been forecast, and May had shown a 0.2% rise. Year-on-year there was also no increase, in line with analyst’s estimates from 0.1% a year ago.

    Core CPI, meanwhile, increased by 0.8%, from 0.9% in 2014 when it had been estimated to rise 0.9%.

    USD

    The dollar weakened on Tuesday after Retail Sales unexpectedly fell in June. The data showed a -0.3% decline which compared to the 1.0% rise in the previous month.

    Annually it rose 1.4% – the lowest since November 2009.

    Retail Sales excluding cars also fell, dropping -0.1% in June compared to a 0.8% rise in May.

    Seven out of the 13 categories in the report declined; the largest of which was Furniture (-1.6%) followed by clothing and footwear (-1.5%), building materials and garden equipment (-1.3%) motor and vehicle dealers (-1.1%), department stores (-0.6%), online stores (-0.4%), restaurants (-0.2%) and grocery stores (-0.2%),

    The sectors which showed growth in sales were as follows: electronics and appliances rose 1.0%, gasoline stores sales rose 0.8%, General Merchandise store sales rose 0.7%, those in sporting goods, hobbies, music and books, inched up 0.1%.

    Other data out on Tuesday showed a fall in Small Business Optimism to 94.1 from 98.3 and Business Inventories rising by 0.3% as forecast.

    EUR

    The euro traded mixed on Tuesday after the release of mixed data.

    The Euro-zone ZEW sentiment survey in July dropped to 42.7 from 53.7 previously. Nevertheless the data overall was read as reasonably positive, especially for Germany where there had been fears a contraction might be underway.

    The German ZEW (current situation) rose to 63.7 from 62.9 when analysts had been expecting a fall to 60.0.

    German Economic Sentiment, however, fell to 29.7 from 31.5 when it had been estimated to come out even lower at 29.0.

    The president of the ZEW institute, Professor Fuest said that neither the concerns over Greece nor the stock-market collapse in China had affected the outlook for the financial experts interviewed in the survey.

    Other data showed German CPI at 0.3%, as expected, and 0.1% E.U Harmonised – also as forecast.

    Industrial Production data, however, rose to 1.6% in June from 0.9% previously, although this was below the 2.0% expected.

    JPY

    The yen weakened in trading on Tuesday as the currency lost its safe-haven appeal with the worst-case-scenario of Greece exiting the euro seems to have been averted. In the second half of the London session the yen was trading at 123.35 per dollar.

    Japan’s Industrial Production surprised to the downside in May, questioning the nation’s ability to sustain a healthy growth pace in the second quarter. Total output of Japan’s mines, manufacturers and utilities dropped 2.1% on month in May, according to the final data from the Ministry of Economy, Trade, and Industry .Measured in annual terms industrial output declined 3.9% in the reported month compared with the 0.1% in the reported month.

    Meanwhile a survey of Japan’s large-scale manufacturers showed that activity rose in the June quarter, adding to signs that the economy is in much better shape after last year’s recession, prompting Prime Minister Shinzo Abe to declare ” Abenomics is in fact picking up acceleration”


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