The Dollar, in trade-weighted, is treading water for the third consecutive session but has managed to extend its modest gains versus Sterling, the Euro and Aussie Dollar. US macro data have been mixed in the past 48 hours. Retail sales contracted 0.2% mom in April – whereas analysts had expected a rise in consumer confidence to push retail sales 0.2% higher – while industrial output shrank 0.5% mom. However, both the Philly Fed and NY Fed indices of manufacturing activity rose to multi-month highs in May, in both cases beating the consensus forecasts. These data points may arguably be more relevant to the extent that they more contemporaneous that the retail sales and industrial output data for April.
Sterling is still underperforming, with GBP/USD having fallen below 1.28 for the first time since mid-February and GBP/EUR tumbling to 1.145. The British government has announced that it would ask parliament to vote on the Withdrawal Agreement Bill – the draft law which sets the terms and conditions of the UK’s exit from the EU – in the week commencing the 3rd June. The House of Commons has already once voted against the WAB and prior to that twice voted against Prime Minister May’s draft Brexit deal. If the government fails to get the WAB through parliament in June, it will reportedly not ask parliament to vote again, raising the perennial Brexit question of “what next?”
