A quiet end to the week on the markets!

Sterling

Sterling is more than happy to be leaning on its correlation to equity markets at the moment; as they move higher so does the pound.

Today’s services sentiment numbers will likely show an interesting contrast given tomorrow’s re-opening of most of the UK hospitality sector to customers once again.

Brexit headlines are postponed until next week following the cancellation of today’s press conferences. We don’t expect anything concrete to be agreed upon until the end of the month; both sides will attempt to use the clock to their advantage.

Euro

Following on from Wednesday’s better than expected manufacturing sentiment numbers and yesterday’s strong employment release, the euro will be looking for this morning’s run of services sentiment data to keep it on the front foot.

EURUSD has stalled in the 1.12s and as long as it doesn’t dip below the 1.1170 level we remain confident of further gains for the pair in the coming weeks.

US Dollar

The ongoing picture of the US jobs market remains one of balance; 4.8m jobs reopening in June but near on 20 million people still out of work. If this month’s jobs report shows anything it shows that for some people normality may resume pretty quickly but for an increasing number of former workers it is going to be a long slog to regain their previous standing.

Wage numbers slid as lower paid employees – those in hospitality or retail jobs for example - rejoined the workforce. Given the recent increases in Covid-19 cases, the ongoing question remains whether these jobs numbers will worsen as local and regional shutdowns are put back into place.

The dollar was weaker in the morning, stronger in the afternoon and finds itself roughly where it was 24hrs ago as we open up today. With the country effectively shut for the Independence Day holiday, the inability for markets to meaningfully hold onto risk over the long weekend suggest that uncertainty over the virus outlook is a factor in these markets. This is not just a meaningless, buy anything rally.

Elsewhere

Economies reopening will hope to mirror Australia’s retail sales announcement this morning. Sales rose by 16.9% on the month with the level of online purchases slipping as physical locations began trading again.

The AUD remains strong this morning and sits just below the 1.80 level against the pound.

Have a great day, a better weekend and please take care, especially if you’re off to the pub!