The new month is here and so is some fairly pathetic news for the UK. ‘Falling’ appears to be the general pattern of play with Sterling tumbling and house prices taking another beating. We are doing our best to look on the bright side. But hey, at least the weather is better!
Pound Sterling – UK Markets
The European Union has agreed to create agencies that will oversee banks, insurers, and financial markets. The UK fought to limit the power of such an organization for fear that it would limit its trading power but a settlement has been reached.
Controversially, it seems that speculative foreign exchange trading is aiding the UK’s financial recovery, almost half of the worlds foreign exchange is traded out of London. The volumes traded globally have now reached $4billon a day (a 20% increase since 2007). (As a footnote, unlike city traders who speculate with currency, most brokers like Currency Solutions complete transactional exchange meaning that whilst you get the best exchange rate for using us there is no risk to your currency).
Looking at data, house prices fell for the second month in a row in August, according to the Nationwide building society. This was the first time that prices had fallen for two consecutive months since February 2009 and the disparity between Halifax and Nationwide is narrowing.
Today sees UK August PMI figures and currently GBP / EUR rate at GMT 1035 was 1.19960 and the GBP / USD rate stood at 1.5402.
US Dollar – US Markets
US equities ground higher after a batch of US economic data had a positive impact on the market. Pending home sales and chain store sales both recorded decent monthly gains and the price of oil was 1.5% up after a rig explosion off Louisiana and approaching hurricane Earl.
US Pending home sales saw a large jump of 5.2% in July. While a modest rebound was hoped for, the size of the increase surprised the market. That said there were significant revisions to previous forecasts meaning the annual house sale rate was unchanged at 20.1%.
US Factory Orders were a touch lower than expected posting a 0.1% gain in July (market consensus 0.2%); any recovery will have a few bumps in the road.
US initial jobless claims came out yesterday and were moderately lower than the second consecutive week. Today sees August Nonfarm payroll and unemployment figures released.
Euro – European Markets
The Euro has been relatively subdued with a brief spike after the ECB meeting yesterday. The meeting produced no major surprises, Euro GDP was unrevised at 1.0% in Q2 and interest rates were left firmly on hold at 1%
July retail sales figures are due out today and as of GMT 1035 the EUR / USD rate was 1.2839.
Other Currencies – Highlights
Silver prices have been impressive and is currently trading not far from the multi-year peak formed in May; being a dollar based commodity this has positive connotations for the Greenback.
Japanese 10 year government bonds rose 10bp to 1.12%, surging at the end of the local session, amid speculation on spending increases.
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