Sterling weakens against the USD after mixed economic data
US stocks wobbled as corporate earnings continued. Among the biggest companies that released were Goldman Sachs, Johnson & Johnson and JP Morgan. Goldman Sachs reported revenues of more than $9.46 billion, which was better than the expected $8.8 billion. The company made $5.81 on a per share basis. The company was boosted by its equities and investing, and lending divisions. JP Morgan reported revenues of more than $28.8 and a net income of more than $9.2 billion. Investors were disappointed by a drop in the bank’s lending margins. Johnson & Johnson reported earnings of $2.58 on net earnings of $5.6 billion. It also increased its guidance for the year.
In Europe, the sterling and euro weakened against the USD after mixed economic data. In the UK, the unemployment rate remained unchanged at 3.8% in May. Wages ex-bonus increased by 3.6% while those with bonus increased by 3.4%. This was a better increase than the expected 3.5% and 3.1% respectively. On the negative side, the claimant count increased by 38k while the employment change increased by 28k, which was lower than the consensus estimate of 45k. Meanwhile, in Germany, the ZEW current condition declined by -1.1, which was lower than the expected 5.0 while the economic sentiment declined by -24.5.
In the United States, data from the Census Bureau showed that the core retail sales remained unchanged at 0.4% in June. This was higher than the consensus estimate of 0.1%. The headline retail sales remained unchanged at 0.4%. Retail sales excluding gas and auto increased by 0.7%. On the other hand, the export price index declined by -0.7% while the import price index declined by -0.9%. Later today, investors will listen to Jerome Powell and other Fed officials who will be participating in various events. Raphael Bostic will speak at a Fed Listens event while Dallas Fed’s Robert Kaplan will speak at the NABE conference in Washington. Jerome Powell will speak in Paris.
The EUR/USD pair declined sharply today to a low of 1.1208, which is the lowest it has been since June 10th. On the hourly chart, the pair is trading along the lower line of the Bollinger Bands while the RSI has dropped to the oversold level of 15. The average directional index rose to a high of 50, while the pair is trading below the short and medium-term moving averages. The pair will likely test the important support level of 1.1200.
The GBP/USD pair declined to an intraday low of 1.1208. This was the lowest level the pair has been since January 3 this year. On the eight-hour chart, the pair is trading below the 21-day and 42-day moving averages. The pair’s RSI is trading slightly above the overbought level of 30 on the eight-hour chart. The Chaikin oscillator is moving below the neutral line. The pair will likely remain along this level, which provides an important support.
The GBP/CAD cross declined sharply to the lowest level since September 2017. On the daily chart below, the pair is trading below all the short, medium, and long-term moving averages. The RSI has continued to remain at the oversold level. The accumulation/distribution indicator too has continued to decline. The pair will likely continue the downward momentum.