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Dollar: Headline Watching
The US Dollar remains a proxy of overall global investor sentiment so we won't be too focussed on domestic releases out of the US, instead we will be keeping an eye on headlines, particularly headlines pertaining to global trade.
"A firmer 10y UST yield boosted the broad USD overnight, as the DXY index held above the 95.00 while fluctuating in a narrow range. As mentioned previously, markets will be headline watching on the trade front, and new headlines were not forthcoming yesterday," says Terence Wu, a treasury strategist with OCBC Bank in Singapore.
Euro: PMIs
Economic data is back on the agenda for the Euro with the release of preliminary PMI numbers which should give markets a steer as to how strong the Eurozone's recovery from the soft start to the year actually is.
The manufacturing PMI is forecast to read at 55.00, the services PMI at 53.7 and the composite PMI at 53.9.
We would suggest that only a significant deviation from expectations would impact on the single-currency as markets have already formed the opinion that data is unlikely to alter the European Central Bank's decision to start raising interest rates towards the end of 2019, at the earliest.
Watch German manufacturing PMI for June too, this should give a steer on how Europe's largest economy is performing at a time of increased tensions over the future of global trade. Analysts are forecasting a reading of 56.3.
Ahead of the releases the Euro is flat against the Pound and registering advances against the majority of the G10 complex.
The Pound: Momentum
For Sterling, it's a quiet end to what has been a busy 24 hours.
We have offered extensive coverage of the Bank of England's June policy decision that saw the Pound turn higher. The question now is how far can the currency go? We have noted that Bank of America say short-term gains can extend, but advances will ultimately be capped.
A host of other analysts are saying they are looking to play the top end of the GBP/EUR exchange rate's recent range.
We would expect Sterling to find support into the weekend, based purely on expectations for lingering positive momentum.
Canada: OPEC, Inflation and Retail Sales
Canada has a busy docket for today.
At 13:30 B.S.T look for the release of inflation data, a monthly figure of 0.4% is forecast by economists, which should take the annualised rate higher to 2.5%. A beat on this figure would likely give the under-pressure CAD a welcome lift as it would signal to markets the need for interest rate rises at the Bank of Canada in the near-future.
The Canadian Dollar has proven particularly responsive to shifts in expectations on BoC policy in the past and today's data could deliver more moves.
Retail sales numbers are out at the same time, and markets are looking for monthly numbers for April to read at 0.5%. A beat will help the CAD we believe.
Note too that today a decision by the oil producing cartel OPEC is due - their decision could well impact the price of oil which could in turn impact the value of the Canadian Dollar.
Granted, CAD's relationship with oil has broken down over recent months so the impact could be greatly reduced. However, any surprises could still impact on intra-day moves in the currency.
The OPEC decision should be delivered in mid- to late-afternoon, London time.
"OPEC is set to meet today to review current production cuts that are due to expire by the end of the year. Tonight, a preliminary deal to hike oil production by 1mb/d was reached though the actual production rise will probably be somewhat lower around 600,000 barrels a day. But it might be difficult to reach a formal agreement today, as Iran that walked out of the meeting overnight. Iran does not want a hike in production. Without Iran and possibly Venezuela, a formal communique might not be send out. Note that non-OPEC member Russia is part of the current deal," says a note to clients issued by Danske Bank.
Asian Currencies: Jittery
Asian currencies have struggled in this atmosphere of a stronger Dollar and elevated trade tensions. However, a paring back of tensions in the second half of this week has afforded them a break.
"Asian currencies, as a whole (North Asians in particular), took a breather yesterday, as the heat surrounding the trade tensions eased off somewhat. Some stabilising influence from China also helped. Nevertheless, overall sentiments remain jittery in Asia, with the USD-Asia looking ready to revert to its climb when the trade tensions resume," says Terence Wu, a treasury strategist with OCBC Bank in Singapore.
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