•Sterling slides as economic data is unveiled to report a sharp slowdown in the economy especially in the service sector.
•The Japanese Yen strengthens as Kuroda fends off rumors of ‘helicopter money’.
•Weaker stock markets weigh on the commodity currencies.
•The US Dollar remains resilient as Donald Trump accepts the US Republican Presidential nomination.
•With the ECB leaving rates on hold, the Euro remains unchanged.
This morning we saw the one-off special release of the Purchasing Manager’s survey which was issued to sense-check the UK economy post Brexit. It reported the service sector contracting with a reading of 47.4, its lowest reading since March 2009, while manufacturing held up slightly better with a reading of 49.1. This will give the Bank of England enough information to warrant a rate cut. It’s important to note though, that as time goes on the data will become more credible and less emotional.
Donald Trump accepted the US Republican Presidential nomination while the US economy continues to tick over. Existing home sales grew by 1.1%
Sterling has weakened both against the Euro and the US Dollar by almost 1% in reaction to the weaker than expected Purchasing Manager’s survey. The economy is weighted heavily towards the service sector which was a lot weaker than the market had been expecting.
The Euro remains pretty much unchanged since the ECB decided to leave rates on hold and said that more time was required to assess the impact of Brexit. It also stated that inflation would start picking up later on this year.
The Loonie continues to weaken and is being dragged down by weaker oil prices and equity prices.
A turnaround in the fortunes of the stock market from positive to negative has dented the Australian dollar as pressure gradually grows again for another rate cut.
Japan’s preliminary PMI was softer than expected as we head into next week’s key Bank of Japan meeting. Kuroda has stated that there is no need for ‘helicopter money’.