IFX Market Report: Monday 17th June 2019

The US dollar rose on Friday to its highest level in nearly 2 weeks following encouraging retail sales data that helped to reassure investors about the health of the US economy.

Retail sales rose 0.5% in May marginally missing expectations of 0.6%, but April’s figure was revised upwards to 0.3% after initially posting a 0.2% decline. Retail sales excluding automobiles and fuel rose 0.5% in May after a rise of 0.3% in April, beating the 0.4% estimate.

The dollar index which measures the dollar’s relative strength against a basket of 6 other major currencies rose throughout the afternoon, eventually hitting a high of 97.58 in the evening, posting a 0.6% climb across the day.

The Federal Reserve are due to begin their 2-day committee meeting tomorrow which makes the timing of the sales data more significant. Analysts had been discussing the chances of the Fed reducing interest rates following some disappointing US data releases earlier in the month, especially the drop in Non-Farm payrolls.

However, data released over the last week has been more encouraging and despite the ongoing trade tensions, investors are no longer expecting a rate cut at this meeting but will be watching for any signals of a rate cut in July.

EURUSD opened at 1.1281 and fell for most of the day as the US dollar strengthened, eventually bottoming out at a close to 2-week low of 1.1215.

The pound finished last week falling for a sixth consecutive week against the euro as investors remained focussed on the Conservative leadership contest. The number of hopefuls has dropped to 6 now and the next stage of voting begins tomorrow with successive ballots, each time the candidate will the least votes will be eliminated until just 2 are left.

GBPEUR traded within a tight range for the whole day between a low in the morning of 1.1216 and a high in the evening of 1.1246.

GBPUSD mirrored EURUSD and apart from a few blips tracked downwards for the entire session from an open of 1.2668 to a low to 1.2581.

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