Dollar under pressure

The dollar is weaker this morning against the euro, trading at over $1.1250, and has also fallen back to over $1.25 against sterling, following comments on interest rates from a couple of Fed members, which leaves the single currency trading largely unchanged against the pound at 90p. Bond yields in the US closed lower yesterday, also on the back of the Fed comments, although they have edged higher again overnight

The head of the New York Fed, Williams, in a speech yesterday said, in general, a central bank should cut interest rates quickly and forcefully “at the first sign of economic distress”, which the market took as a signal that the Fed might cut by 50bps (rather than 25bps) at its end-July meeting hence the slide in the dollar. However, as the Fed constantly reminds us, the US economy is in a reasonably “good place”, and indeed the New York Fed later clarified that Williams was not signalling anything about the July meeting let alone the size of any possible rate cut

Another Fed member, Clarida, did, though, highlight the uncertainty surrounding the outlook for the US economy – related to trade tensions in the main – and said under such circumstances the Fed  could lower interest rates to help sustain the economic expansion

In its latest report, the House of Commons’ Committee on Exiting the EU warns that a ‘no deal’ Brexit would “lead to severe disruption, pose a fundamental risk to the competitiveness of key sectors of the UK’s economy and put many jobs and livelihoods at risk”

Staying with the UK, retail sales rose strongly in June, increasing by 1% in volume terms from May and by 3.6% on June 2018

Quiet enough on the data front today with consumer confidence in the US the main release of note