Macro Commentary

Speculation continues to grow that the US will need to cut interest rates this year, helped by comments from Fed chair Powell, in response to growing trade and inflationary risks.

Some forecasters expect a cut as early as next month, with potentially further cuts later this year.

This in turn has given US equity markets a boost.

Global economic data has continued to weaken, with the World Bank cutting its global growth forecasts for this year down to 2.6%.

The ECB yesterday kept policy on hold, but were also rather dovish in their assessment of the economy.

On the exchanges, we have seen some dollar weakness on the growing possibility of US rate cuts.

GBP/USD has moved off its recent lows of around 1.2600, but needs a break of 1.2750 to alleviate the immediate negative sentiment.

The key focus today is the US payrolls data at 1.30pm.

GBP/EUR continues to struggle around the 1.1300 level, whilst EUR/USD has started to gradually push higher on the generally weaker dollar.

GBP/EUR – 1-year chart

Week ahead

Date Release Last Expected*
10/6/19 UK Industrial Prod. YoY 1.3%  1.0%
10/6/19 UK Manufacturing Prod. YoY 2.6%  2.4%
10/6/19 UK Construction Output SA YoY 3.2%  3.3%
10/6/19 UK Trade Balance -£5408m  -£4200m
11/6/19 UK Average Weekly Earns. 3M/YoY 3.2%  3.0%
11/6/19 UK Unemployment Rate 3.8%  3.8%
12/6/19 US CPI YoY 2.0% 1.9%

*Bloomberg survey

Equity Indices

Indices Previous Close YTD % Change
FTSE 100 7259 +8.58%
S&P 2843 +13.43%
EUROSTOXX 3338 +12.07%
DFM GENERAL INDEX 2620 +3.56%

Foreign Exchange

Currency Last Currency Last
EUR/USD 1.1265 AUD/USD 0.6975
GBP/USD 1.2715 USD/AED 3.6730
GBP/EUR 1.1290 GBP/AED 4.6720
USD/CHF 0.9935 EUR/AED 4.1390
USD/JPY 108.45 XAU/USD 1335

UK Benchmark Rates

Libor   Swap Mid  
3 month 0.78563% 2 year 0.83%
6 month 0.86538% 3 year 0.84%
12 month 0.97425% 5 year 0.89%

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