UK Job Data shows firm inflation and tight labour market
US Retail Sales Control Group raises above expectations
GE ZEW Index hits new multi-year lows
Iran to reduce commitments to Nuclear Deal
Second trading day of the week definitely more lively than yesterday with US Retail Sales adding some confusion on the need for interest rate cuts and some more punchy rhetoric from Iran to bring some more action in the markets today. A rate cut in July remains the base case expectation, however the latest retail sales report brings doubt over the need of aggressive cuts going forward towards the end of the 2019. The overall changed in the implied probability of a July cut remains around levels prior to the release.
The Equity space in the US closed the EU session in red amid weaker argument for aggressive rate cuts in 2019. However, SP500 settled firmly above the 3000 mark.
The FX complex was mainly led by gains in the US Dollar amid better than expected US Retail Sales Control (0.7% vs 0.3 exp). EUR pushed lower below the 1.1300 level amid a weaker ZEW Index (-24.5 vs -22.3 expected) and solid US data. GBP printed fresh two-years as negative sentiment over the currency pair gets exacerbated by USD strength. JPY also closed in red amid a resilient performance in equities and USD strength.
Crude Oil traded choppy amid US-Iran tensions and a stronger US Dollar. Gold popped lower after the release of US data, however showing good resilience just above the 1400 level.
US Yields hedged higher amid with the 10Y firmly above 2%
____________________ EU Close
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