Friday AM: Key EU Meet for GBP | Trump Wants Lower USD | CAD Retail Sales Test

Image © Kasto, Adobe Images

GBP

The Pound has suffered a torrid week of trade as political risks rise and markets become increasingly wary of a 'no deal' Brexit outcome.

The story continues on Friday, July 20 with the EU General Affairs Council meeting to assess the UK's Brexit white paper.

Barnier will discuss his conclusion of the Brexit white paper with the 27 EU ministers and make recommendations to the council, and will give a press conference to summarise their conclusions.

In a briefing to clients, analysts at TD Securities say for now the future trading arrangement is not a priority to the EU  as the two sides have until late-2020 to negotiate this.

"Barnier's focus is therefore likely to be on any implications of the Chequers agreement for the Irish border," say TD Securities.

TD Securities give their potential target for where the EUR/GBP exchange rate might go if the EU strikes a dour tone today here.

USD

Trump wants a weaker Dollar; a development that might or might not have triggered the softening in the Greenback witnessed over the past 24 hours.

The message from Trump is that the stronger Dollar is unattractive as the country tries to improve its global trade performance. Specifically, he is “not thrilled” by the Fed’s rate hikes.

No doubt Trump has been keeping an eye on the sharp rise in the value of the Dollar against the Chinese Renminbi of late, a move that is softening the blow to China of the tariffs imposed by the US against Chinese imports.

It could well be that China is encouraging a weaker Renminbi as a response to the tariffs, noting that they have very little ammunition when it comes to enacting tit-for-tat tariffs on US imports. Trump will no doubt be infuriated by these developments.

"FX markets were rattled by Trump's comments that he prefers a weaker USD and lower interest rate policy," say TD Securities.

The interview the comment was extracted from will air in full at 11:00 BST on CNBC, "but the risk of the Fed yielding to political pressure is minimal," says Adam Cole at RBC Capital Markets.

CAD

Retail sales and inflation data dominate the calendar for the Canadian Dollar today.

Markets are looking for a reading of 1.1% month-on-month growth in retail sales for the month of May, while the core retail sales figure is forecast to rise by 0.7% month-on-month.

Monthly CPI inflation is forecast to have risen 0.1% for the month of June.

"CAD Retail sales and CPI will provide the first top-tier data since the July BoC meeting," point out TD Securities. TD are looking for an above-consensus 1.3% increase in retail sales as the weather-related drag from April unwinds.

NZD

New Zealand migration statistics showed migration for June slowing further to hit 4840 from 5080, well off the highs of 6000+ that were regularly reported during 2015-2017.

Immigration is seen as a driver of New Zealand economic growth but politically it is something of a hot potato with NZ First - a coalition partner in the government - pledging to cut numbers coming into the country.

The decline in immigration does however come without the need to enact any legislation.

Nevertheless, the slowing trend does look suggestive of lower economic growth rates over coming months while easing pressure on the housing stock, something that only adds to the case for the Reserve Bank of New Zealand to keep interest rates on hold which will in turn likely keep NZD subdued.

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