• Construction falls for a third month in a row
  • Kickoff on Monday
  • Kicking the can… again
  • Yen retreats for a second day

The dollar pulled back from yesterday’s gains as investors were disappointed by new home data. Housing starts – which covers the construction of new houses – fell -5.5% in May. It was the worst reading in eight months, and the two previous months were also revised lower. Declines were highest in the South and Midwest, where a shortage of skilled workers is weighing on construction. Housing accounts for over 15% of GDP and could weigh on economic growth in Q2. While this indicator is notoriously volatile, three months of decline is yet another nail in the coffin of lackluster economic growth.

Almost a year after the referendum where the British voted to leave the European Union, we are finally set to work out exactly what that looks like. Brexit negotiations kick off on Monday, June 19; yet the EU already has a leg up heading into the discussion. Prime Minister Theresa May wanted to lead the dialogue by establishing a trade relationship in tandem with the divorce talks, but the UK government has conceded to the EU’s demand to establish the terms of Britain’s exit before addressing any trade deal.

The Eurozone and International Monetary Fund have backed yet another payout to Greece to avert yet another debt crisis. The IMF continues to seek long-term debt relief for the beleaguered nation, calling the current programme “highly unsustainable” as Greece continues to battle an eight-year-long economic crisis. EU finance ministers seem to be coming around to the idea, but moving from digging their heels in to dragging their feet indicates that a final deal may still be a ways off.

A stronger dollar and risk-on mood pushed the yen down 1.2% in yesterday’s session, the biggest drop since January.  JPY remains on the backfoot this morning after the Bank of Japan announced there would be no change to monetary policy. BoJ Governor Haruhiko Kuroda said that they intend to keep their bond buying program in tact as inflation remains well below their 2 percent target. Economic conditions remain only modestly positive which furthers the argument for keeping monetary policy on hold. Without any signals of a significant upturn or downturn in the economy, slow and steady will trump any exit strategy in the near term.

EURUSD: Euro pushing higher as the EU grants Greece another bailout.

GBPUSD: Sterling is slightly higher as the UK prepares to begin Brexit negotiations with the EU on Monday.

AUDUSD: Greater risk appetite driving Aussie dollar higher.

USDCAD: Canadian dollar recovered as the USD fell with a drop in new home construction.

USDJPY: Although the yen has recovered some losses, it remains on the back foot after yesterday saw the biggest drop since January.