DAILY FX WRAP: BoE’s Carney strikes a hawkish tone to see GBP outperform while weak US retail sales weigh on USD
GBP has been the notable outperformer today after hawkish comments from BoE’s Carney, suggesting that the timing for a rate hike is edging closer. This saw GBP/USD move higher by over 100 pips in an otherwise relatively light news flow day. While today saw hawkish sentiment push GBP higher, the US economy still appears fragile ahead of any potential Fed rate hike after Goldman Sachs and Barclays both lowered their US Q2 GDP forecast after worse than expected retail sales (-0.3% vs. Exp. 0.3%). This saw USD trend lower throughout the day to trade firmly in the red. The other notable data of the day came in the form of CPI for UK (0.0% vs. Exp. 0.0) and German ZEW survey Expectations for Eurozone (29.7 vs. Exp. 29), both of which failed to have any significant impact on their respective currencies.
Away from the data slate, today saw softness in commodity currencies including CAD, NOK and RUB as a consequence of the Iranian nuclear deal with INR and TRY notable stronger this morning, as the net importers of oil are set to benefit from lower prices. The deal leads to the possibility of long term lower oil prices if sanctions are lifted from the oil exporter, who could purportedly increase supply by 250k bpd in 6 to 12 months.
Looking ahead, tomorrow sees a host of tier one data including Chinese industrial production and retail sales, UK unemployment data, US PPI, empire manufacturing, New Zealand CPI and BoC rate decision and BoJ monetary policy statement. In terms of Central bank speakers, tomorrow sees Fed's George, Mester, Williams and Yellen all scheduled to make comments.