Cost pressures return

Today's news headlines: 

‘Four-week extension to England’s lockdown dashes business hopes’. The UK will be unable to relax all coronavirus restrictions until at least July 19th as coronavirus cases rise. Despite many businesses not being able to operate at full capacity, contributions towards business rates kick back in at the end of June, as well as a 10% contribution to furlough costs, with the scheme coming to an end in September. Hospitality, arguably the hardest hit sector, looks set to lose another £3bn in lost sales as a result of the lockdown extension. The hope is that all adults can receive a coronavirus jab before the target date to allow a smooth transition back to normality. (Financial Times) 

‘China approves highest-ever outflows for mainland investors’. China has begun loosening its grip on the national currency, authorising some $147bn of investment to leave the country. This comes as the Renminbi rose 10% this year against the US Dollar and hit multi-year highs. The worry in the country is ballooning asset prices and the strengthening currency—not helpful for the largest exporter in the world. For the first time since the 2008 financial crisis, China is encouraging the holding of foreign cash in an attempt to slow down the appreciation of the domestic currency. (Financial Times) 

Today's events, rates, and data 

  • The S&P 500 finished the day up 0.18% yesterday ahead of Federal Reserve meetings later this week. Cable is little changed around $1.41 interbank after the announcement that England’s lockdown easing will be delayed. US Retail Sales data out later today could create some movement. 

Today's events

UK Unemployment Rate: 4.7% vs 4.8% last month
Bank of England Governor Andrew Bailey speaks: 1:15PM
US Retail and Core Retail Sales m/m: 1:30PM
US PPI and Core PPI m/m: 1:30PM
US Industrial Production m/m: 2:15PM
US Business Inventories m/m: 3:00PM

Interbank rates

GBP/USD – 1.4117
GBP/EUR – 1.1641
EUR/USD – 1.2132
USD/CAD – 1.2136

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