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    GBP and stocks move lower

    The international trade data pointed out that 1Q GDP growth estimates for Australian economy needs to be pushed higher. The C/A balance for 1Q was a bit more negative than expected (-20.8bn AUD vs. -19.5bn), but the accompanying figure describing net exports contribution to GDP was 1.1pp, while 0.7 was the median of expectations. AUD was quick to react to the data and is the strongest among G-10 today, up 0.76% vs. USD. GBP slid on new Brexit fears.

    There was an article in the Sun today by Boris Johnson and other opponents of the EU membership. Moreover, there was also a poll checking the public opinion after worries have spread about the ability to control borders while still in the EU. A poll by ORB for the Daily Telegraph was out yesterday late at night, conducted among 800 persons last week. 51% prefer the UK to stay in the EU, 46% were against. This is a significant reduction of the advantage of the status quo option. GBPUSD was traded at 1.4590 this morning.The EURGBP has also gained on some weakness in sterling as Brexit polls today suggest the position of the remain camp isn’t as strong as was previously thought. A telephone poll from ICM/Guardian shows the ’leave’ side at 45% compared to 42% to ’remain’ in the EU. Antipodean currencies are also moving firmly higher with the NZDUSD and AUDUSD sitting on impressive gains. 

    Tha April reading of German retail sales we got some minutes ago managed to surprise both ways at the same time. The MoM growth was -0.9% vs. expectations od 0.9%, so a major disappointment and a second one in a row. On the other hand, he YoY growth at 2.3% was significantly higher than expected (1.7%), and showing acceleration from 0.6% for March (revised from 0.7%).What’s more, the German unemployment rate for May unexpectedly dropped to 6.1% while consensus had called for 6.2%. Nevertheless, EUR was traded lower vs. USD losing about 0.6%. 

    European major indices have been traded lower this morning despite strong gains on Asian markets. Financial companies have been mostly lower. Moreover, Volkswagen decreased by 2% after the carmaker reported 19.3% drop in first-quarter pretax profit. London’s FTSE 100 dropped as lower commodity prices weighed on the mining sector. In the U.S., equity markets pointed to a steady to higher open. 

    The main economic releases this afternoon came at 13:30 with the US core PCE price index moving higher to 0.2%, as was expected. At the same time Canadian GDP posted a second successive monthly drop, decline by 0.2% month on month. Later on we had some weak US data which negated the rise in the PCE print somewhat as the CB consumer confidence declined to 92.6.

    Crude benchmarks are slightly higher today as the bi-annual OPEC meeting this Thursday approaches, with Brent ( 1.05%) consolidating above $50 a barrel. Gold ( 0.83%) looks set to break its losing streak, with the precious metal trading $1214.77/oz at the time of writing.  

    Looking ahead there’s some important Chinese manufacturing and non-manufacturing data released overnight with the official read and the Caixin figures both due out. Also during the Asian session we have Australian GDP Q/Q whichis expected to increase by 0.6%. UK Manufacturing PMI at 09:30 is the standout release of tomorrow morning’s session before the US ISM equivalent rounds off the day at 15:00

     

    Any person acting on this information does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it.


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