Pound gets a pay rise

Sterling got a leg up yesterday (17 June) when data confirmed that average weekly earnings have risen 2.7% year-on-year. A move to higher wages has always been a prerequisite for the UK to look at raising interest rates, so the uptick pushed up the pound.
 
In other data, UK unemployment remained at 5.50% (as expected), and the Bank of England minutes confirmed that all nine members voted to keep interest rates on hold (again, as expected). UK retail sales figures (out today, 18 June) will give further clues as to the strength of the UK recovery.
 

US dollar wanes as rate rise remains elusive
 
Last night the US Federal Reserve’s Open Market Committee (FOMC) held its June meeting. Rather than the FOMC gearing up the markets for an imminent rate rise, its tone was more subdued. Most members are still pointing towards a rate rise later this year, but the expectation is that we will only see one increase this year.
 
Despite US data showing improvements recently, the FOMC is still content to keep its foot off the accelerator for now. The US dollar weakened on the news, and will look to ongoing data releases for further direction.

 
Euro manages to hold its own
 
The Greek Central Bank has warned of an “uncontrollable crisis” should negotiations between Greece and its creditors fall flat. Attendees at tonight’s Eurogroup meeting surely didn’t need the reminder, but Greece can take solace in the fact that Germany’s Chancellor, Angela Merkel, and France’s finance minister, Michel Sapin, have both publicly said that a deal is still possible.
 
The euro is holding up well, despite concerns that Greece is about to default on its next repayment to the International Monetary Fund and warnings from US Federal Reserve Chair Janet Yellen of “spillover effects” across the markets if Greece’s drama becomes a tragedy.  

 
Norwegian, Swedish and Swiss central bank announcements due today
 
Elsewhere today we have central bank meetings in Norway and Sweden. In Norway, the central bank could unpin itself from a very dovish trajectory by confirming that no further cuts will follow. If so, this should lead to gains in the Norwegian krone.
 
The Swiss National Bank (SNB) has markets on edge as we wait to see whether it will cut interest rates further, or if it will hold off. The SNB has the ability to surprise the markets, as we saw back in January when it removed its peg to the euro, so the market will be on its toes.