G10 Currencies catch up
- Mr. Adelino Izidro
- Jun 20
- 4 min read
In this week´s data release, things were mostly as expected from the global market. There are signs of stagflation and geopolitical issues that may come to dampen the world´s economy.
In this Article: |
1. Australia |
Australia
Inflation – overall inflation figures in Australia has been in a downtrend for some time now. This is in part due to lower Iron ore prices, China´s economic activities and restrictive Reserve Bank of Australia policy stance.
Iron Ore – Iron Ore prices have been slowing which contributes to lower inflation, lower economic activity and lower GDP figures. China's steel output dropped 6.9% in May, but Iron ore futures climbed to around CNY 707.5 per tonne on Friday, reaching a two-week high amid signs of resilient demand in China, the world’s top steel producer. Should China economic activity increase, this will most likely lead to higher Iron ore demand which in turn busts the Australian economy.
GDP – Australia GDP grew 0.2% in the 1st Quarter of 2025 from 0.4% in the 4th Quarter of 2024 and is expected to grow 0.5% in the 2nd Quarter of 2025. The manufacturing and services PMI are in the expansion territory and is expected to continue staying there. Retail sales have unexpectedly decreased 0.1% (expectations was for a growth of 0.3%). Has for consumer confidence, it has increased from 92.1 in May to 92.6 in June and is expected to continue doing so.
Labour Market – Unemployment rate has remains stagnant at 4.1% for the past 3 months. As for Employment rate, it has decreased from 62.3% in April to 62.2% in May. Both indicators have shown resilience in the past 6 months albeit there are slight trends which doesn’t warrant cause for concern as of now.
United Kingdom
Inflation – YoY inflation figures for the UK are still high, with headline inflation decreasing from 3.5% in April to 3.4%. Core YoY figures are at 3.5% for May, which is a decrease from 3.8% in April. There are risk to upside, primarily due to high Brent crude oil prices and geopolitics issues in Middle East.
BOE – this Week the Bank of England decided to leave interest rates unchanged, as expected by markets, however, we had 3/9 MPC members voting for a cut in Interest when expectation was for a 2/9. This signals that sentiment within MPC is rapidly shifting. It might be due to economic slowdown weak demand.
Whilst we have weakening economic conditions, inflation is not where the MPC want it to be for them to feel comfortable in cutting rates further. There are still economic forces which we ought to wait and see the effects they will have on inflation figures.
GDP – this week we received several information regarding UK economic conditions. GDP MoM contracted 0.3%, which is more than the (-0.1%) expected. Both the Industrial production MoM and Manufacturing MoM contracted for a 2nd consecutive month. The YoY figures for the same indicators are not painting a good picture as well. Today at 07:00 AM, Retail sales figures, have come out negative across the board – without exception.
Labour Market – UK labour market is also not looking good. Since August 2024, unemployment has been increasing, from 4% to 4.4% now in April 2025 (same as Mach 2017).
Email: info@reigncapital.co.uk
UK Phone: +44 7572 513332 | PT Phone: +351 9390 79132
United Kingdom Address: 37th Floor, 1 Canada Square, Canary Wharf, London, E14 5AA. Portugal Address: Avenida da República 50, 2nd floor, Lisbon, 1050-196, Portugal.
For more information please visit: https://www.reigncapital.co.uk/insights
Disclaimer:
This publication has been prepared by the Investment & Proprietary Trading Department of Reign Capital Limited. (“RC”) solely for information purposes without regard to any particular user's investment objectives, financial situation, or means. The information in the publication is not an investment recommendation and it is not investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Reasonable care has been taken to ensure that this publication is not untrue or misleading when published, but RC does not represent that it is accurate or complete. RC does not accept any liability for any direct, indirect or consequential loss arising from any use of this publication. Unless otherwise stated, any views, forecasts, or estimates are solely those of the author(s), as of the date of the publication and are subject to change without notice. The distribution of this publication may be restricted by law or regulation in different geographical jurisdictions and persons into whose possession this publication comes should inform themselves about, and observe, such restrictions. Copyright and database rights protection exists in this report and it may not be reproduced, distributed or published by any person for any purpose without the prior express consent in writing of RC. Reign Capital Limited is an Institute of Trading and Quant Global Macro Management firm registered in England and Wales under registered number 12937913. Reign Capital Limited authorised and regulated by FCA Hosting Licence in strategic partnership with Pelican Asset Manager / London & Eastern LLP (authorised and regulated by the FCA, FRN: Number 534484), and brokerage alliance with AXI / AxiCorp Limited (authorised and regulated broker in the UK by the FCA). Our registered address is at Office 3.05, 1 King Street, London, EC2V 8AU, United Kingdom. Investors' capital is always at risk.
Comments