FX Noon: What Can Carney Conjure Up Today?

A somewhat brief piece from me today as I’m about to embark on some travel. Looking at events overnight firstly, Australian wage data came in significantly softer, alluding to minimal wage growth, the pace of which represents the slowest in a number of years. All this, hot on the heels of what in reality was a rather benign federal budget.

The upside seen in the currency in recent hours, however, is not reflective of the better prospects of the nation, but rather an indirect function of broad USD softness, higher commodity prices and muted demand for the AUD via various cross legs, not least of which the AUDNZD.

This morning has already seen data from both Germany and France, with the latter outperforming the former and yet collectively pointing to a somewhat softer *core* within the EU. EURUSD has seen some upside though, sparked by a late rally in the NY session and continued this morning.

All eyes will now be on the cumulative European flash GDP estimate, which follows the UK employment data print. I would wager that the UK data while likely to be market moving, will lag behind the imminent appearance of Bank of England governor Mark Carney delivering the quarterly inflation report. My feelings in this piece of news were made known in this piece yesterday and now we simply wait to hear what he has to say.

Naturally, should the employment data show the continuation of softer wage growth, the inflation report will have a harder time justifying the notion of overall inflationary growth within the broader economy.

This afternoon is perhaps of equal (if not greater) importance as we see the release of US retail sales data. Given the lacklustre nature of recent US economic releases, most will be looking to see whether this bellwether can right the ship so to speak and reinstate a sense of urgency among those anticipating a hike in Fed rates sooner rather than later.

In terms of positioning, I remain short of Cable presently and willing to add more on exuberant (if not unjustified) spikes higher), looking for a return (perhaps not today) into the 1.5400 area.

Otherwise I have little else on, but would be remiss not to mention my gut feeling which currently speaks to me of a higher EURUSD. Not significantly so, but higher nonetheless, perhaps just enough to challenge known offers residing into the 1.1280/1.1330 area.

Apologies once again for the brevity of today’s piece, however there’s a train I need to catch shortly...

As always, helmets on and good luck out there today.