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The US dollar shook off underwhelming data to rise yesterday.
Sterling and the euro both struggled to gain any traction against the US dollar yesterday. Despite underwhelming data from across the Atlantic, the US dollar capitalised on a stormy market mood to claw back early-morning European gains.
If currency markets had been celebrating a minor success in the French elections, it didn’t take long to put out the fire of optimism. By Monday afternoon, the lingering risk posed by the UK election and Sunday’s second leg of the French elections served to stall any momentum that had built.
This reversal came despite the release of US ISM manufacturing PMI figures for June. Having been forecast to climb to 50, the figure actually fell from May’s 48.7 to reach 48.5 — its lowest since February.
German inflation data did provide cause for optimism, although it may not help the euro in the short term. Headline inflation in Europe’s largest economy fell to 2.2% last month, bucking May’s increase to 2.4% and beating forecasts of 2.3%.
We’ll get a look at the eurozone’s combined inflation figures later this morning. The usual band of expert economists are predicting the headline number to fall slightly, down from 2.6% to 2.5% in June.
The Supreme Court sent shockwaves through America yesterday by ruling that former Presidents are entitled to ‘at least presumptive immunity’ from prosecution for all official acts. The decision provided Donald Trump with a huge boost and likely means he will not stand trial for efforts to stop the transfer of power.
This was no run of the mill legal case, though. The decision is highly contentious and raises questions about the boundaries between the personal and professional acts of the executive branch.
With just two days to go, election fever is gripping the UK. Well, perhaps that may be an overstatement, but Liberal Democrat leader Ed Davey did his part to keep things interesting by taking part in a bungee jump. Keir Starmer meanwhile said the UK would be able to purse a ‘better deal’ with the EU regardless of who takes power in France.
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GBP: GBP/EUR falls
The pound fell to its lowest level in three weeks against the euro yesterday. That was the result of continuing dynamics in markets, as well as a tentatively positive reaction to the first round of the French elections.
GBP/USD: the past year
EUR: Slower across the board
German inflation is one of Europe’s key economic touchpoints, so news that it was down across almost all sectors was a boost for its economy. Services inflation stabilised, while reductions in the cost of goods and energy helped offset a slight uptick in food prices.
GBP/EUR: the past year
USD: Unmoved
It was noteworthy how muted the reaction was to US manufacturing PMI data. Despite the miss, the US dollar didn’t let it stand in the way of an afternoon comeback, highlighting the power of safe-haven dynamics.
EUR/USD: the past year
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