China released a number of data points last week, starting out with trade figures which later gave way to the latest numbers for gross domestic product. In spite of expectations that GDP growth would taper further to 6.60% on an annualized basis, the figure stabilized at 6.70%, giving hope to policymakers that their accommodative efforts have helped maintain growth. Nevertheless forecasts remain positive about additional stimulus just as further Yuan devaluation sent the USDCNH pair to the highest levels since January, closing the week at 6.7096. In Europe, former UK Prime Minister David Cameron handed over the reins to Theresa May last week, leading to a transition that will eventually lead to the British exit from the European Union. One of her first appointments as Prime Minister was “leave” proponent Boris Johnson who will now serve as Foreign Minister. Although volatility in the Pound fell to a degree, Thursday’s Monetary Policy Committee decision to leave rates on hold saw the Pound climb significantly versus the US dollar before retreating during Friday’s session to end the week nearly 200 pips higher. The Bank of England did telegraph to markets that it would be loosening policy further at the August meeting of the MPC in spite of one member voting for a 25 basis point at the latest meeting. Across the Atlantic, a rising producer price index and stable consumer prices gave way to speculation that interest rates may have to rise sooner than anticipated, especially if inflation picks up. While headline consumer prices did not move the needle significantly on Friday, matching the prior month’s figures, the surging PPI may give sustain the upward trend in prices. US retail sales did surge to the upside, climbing 0.60% in June and further evidence of a pickup in economic activity.
