Today's data releasesKey levels
10:00EZ industrial production 
13:30Fed's Kashkari speaksSupport
13:30US CPI and initial claimsGBP/USD1.3200
16:35Fed's Harker speaksGBP/EUR1.1250

Market overview

Despite last night’s result, we are extremely proud of how far the young England team have come. The team should be very pleased of their achievement and the impact they’ve had, they brought a great sense of unity and belonging back home. Away from football news and on to Brexit progress. The government is set to publish its Brexit White Paper later today which will expand somewhat on its three page announcement after the Chequers Summit last Friday. Media reports suggest that the paper will abandon the government’s hopes of a system of mutual recognition between the UK and the EU’s financial services industries and instead aim for a system of enhanced equivalence. The Chequers agreement also received an endorsement from British Trade Minister, Fox, who said he doesn’t believe the agreement on Brexit approach inhibits new trade deals with other parts of the world outside of EU.

Financial markets experienced a risk off move yesterday, with equity markets trading in the reds, with Chinese stocks experiencing the worst loses. The US-China developments seems to have broken up the recovery in risk sentiment seen earlier in the week. The move also saw the Bloomberg Dollar Spot Index rally 0.7% against a basket of 10 global currencies and furthermore, the Chinese yuan fell the most in a single session since August 2015; it now takes 6.68 CNY to buy 1 USD. Similar to the equity markets, commodities were also hit hard, with WTI and Brent benchmarks hammered 4.7% and 6.1%, respectively, plunging the most in two years, despite the biggest drop in American crude inventories since 2016. It appears that the downturn is due to the news that Libya’s National Oil corporation is lifting oil export restrictions and boosting the global oil production by c800k barrels per day.


In Europe, ECB officials are said to be split on timing for rate hike. Some officials say an increase is possible as early as July 2019 and others rule out a move until autumn. The meaning of the wording in ECB policy statement wasn’t debated, people told Reuters, a possible reason for the differing interpretations.

The day ahead

Looking at the day ahead, the main event away from the Brexit White Paper is the June CPI report in the US in the afternoon. In terms of central banks, Minneapolis Fed President Neel Kashkari will speak in a panel discussion on immigration issues and Philadelphia Fed President Patrick Harker will speak at the annual Rocky Mountain economic summit. The ECB is also set to publish the account of its June meeting, which may shed some more light on how much debate there was among the Governing Council on monetary policy. 

Thought of the day

The fairy-tale is over and they’re coming home. These are words I thought I’d be typing a few weeks ago but despite the doom and gloom this morning, we should congratulate the England football team for defying expectations, inspiring a nation and making us believe (albeit briefly) once again! England will now face a 3rd place play off against Belgium on Saturday before the players can jet off on their long-overdue summer holidays. With the start of the Premier league season less than a month away, the England (and Belgium) players will need plenty of rest and recuperation, perhaps on a beach far from home, ahead of another gruelling season ahead. They should, however, be mindful of the story of American model, Katarina Zarutskie, who was recently bitten by a shark while on holiday in the Caribbean. You could say that Ms Zarutskie brought it on herself after deciding to jump in and pose with a pack of nurse sharks that were swimming in a shallow bay. Fortunately her injuries were not life threatening and she was lucky to escape needing only stitches and antibiotics for her injuries, but with some fragments of teeth left in the wound! The markets at times may leave you feeling like your swimming in dangerous territory. All may seem calm and serene at first, but there’s always the danger you may get bitten, sometimes when you least expect it! If you’d like some guidance on how to navigate these sometimes treacherous waters, give your Investec dealer a call today to hear more about the tools and strategies at our disposal that can help you do this. 

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