News and views
The US holiday on Friday made for a quiet London session, currencies trading in narrow ranges. The overall tone remained mildly bearish risk, Eurostoxx futures sitting just above recent lows. Brent crude oil fell 1%, and made a post-23 June low. London copper futures also registered a loss, of 1.1%.
The US dollar was only 0.4% firmer over the Friday session, with little news to provide direction. India joined the body of opinion on dollar valuation and its place in reserves, and Canada’s finance minister Flaherty expected the issues to be discussed at next week’s G8 meeting, with no noticeable market effect. EUR weakened slightly to around 1.3965, the weaker Eurozone retail sales only coinciding with the move. GBP lost a cent, and spent most of the session stuck at 1.6330. USD/JPY hardly budged from 96.
AUD consolidated in a 0.7950 to 0.8000 range.
NZD slipped from 0.6350 to 0.6290, and is looking soggy. AUD/NZD peaked around 1.2685 and holds that level.
US holiday – no data to report.
Euroland retail sales down 0.4% in May. Weaker than expected, which along with downward revisions to history pulled the annual sales pace down to –3.3% yr, the second weakest on record. On a positive note, the slippage in the June services PMI was revised from 0.3 pts to 0.1pts, the final reading being 44.7 compared to 44.5 in the advance report (but 44.8 in May).
UK services PMI 51.6 in June. Slight slippage from 51.7 in May but still indicate of a second month of expansion in the services sector. Separately, the BoE reported mortgage equity withdrawal of –£8.1bn (i.e. a substantial equity injection). There have now been four quarters when the UK household sector has not accessed housing wealth to fund other spending in this way.
Outlook
Our multi-month bearish NZD view remains intact. Resistance today should be at 0.6350, and the next targets to the downside are 0.6260 and 0.6150. Expect a low volatility day in the wake of the US holiday.
