Bank of England and European Central Bank both make speeches today
Today is a busy day for market participants everywhere. Along with a slew of economic data points, there are also a couple of speeches by central bankers scheduled today. In the UK, an early estimate of Britain’s macro profile for September can be viewed via the Confederation of British Industry’s (CBI) industrial orders survey data.
In the Eurozone, a flash reading of the region’s consumer confidence index will be unveiled, while in the US, the Chicago Fed national activity index and existing home sales deserve close attention. The market will listen closely to speeches by the European Central Bank (ECB) President, Mario Draghi, and the Bank of England (BoE) Governor, Mark Carney.
Pound Sterling – UK Markets
The Pound has maintained its previous session momentum against the US Dollar this morning. The UK’s CBI industrial trends order data is due today, expected to continue its downward trend in September. In addition to this, a speech by the BoE Governor, Mark Carney is scheduled later in the day.
Yesterday, Sterling ended higher against the greenback, amid a broad weakness in the US Dollar following the Fed’s decision to hold benchmark interest rate steady. The BoE’s quarterly bulletin indicated that there is a growing reluctance among British business firms to hire and invest following Brexit. Further, Paris-based Organisation for Economic Co-operation and Development (OECD) backtracked on its earlier warning that the UK would suffer instant damage from the Brexit vote. It revised its UK economic growth forecast upwards, citing the nation’s stronger than expected performance in the first half of 2016, and was led by the BoE’s effort in August to spur economic activity in the nation.
US Dollar – US Markets
The greenback is trading weaker against the Pound and the Euro this morning. The US weekly jobless claims, housing price index and the Chicago Fed national activity index are all scheduled to be released later.
Yesterday, the US Dollar weakened against most of its major peers. The Federal Open Market Committee, at the conclusion of its 2-day monetary policy meeting, maintained the federal funds rate steady between the target range of 0.25% and 0.50%. Meanwhile, the US Fed hinted that it could tighten monetary policy by the end of this year as the nation’s labour market has improved further. The Federal Reserve (Fed) Chairwoman, Janet Yellen, stated that US economic growth looks stronger and a rate rise would be needed to prevent the nation’s economy from overheating and fueling high inflation. Moreover, the central bank slashed its longer-run interest rate forecast to 2.9% from 3.0%. Separate data revealed that US mortgage applications dropped last week, touching its lowest level since June.
Euro – European Markets
The shared currency is trading on a stronger footing against the greenback and the Pound this morning. Data released earlier showed that the French business climate index surprisingly rose in September, as business sentiment among manufacturing and service firms improved. However, the gain was restricted as the retail trade index recorded a drop for the second consecutive month. In its monthly economic bulletin, the ECB said it expects the Euro region’s economy to grow at a modest but steady pace in the coming months. It also projected the global economy to rebound gradually, with risks to growth outlook remaining on the downside. Later today, the ECB President, Mario Draghi, is scheduled to deliver a speech in Frankfurt. Further, the preliminary reading of the Eurozone’s consumer confidence index is expected to register a small improvement for September, after falling to its lowest level since April 2016 during the previous month.
Yesterday, the Euro ended higher against its major peers. Separately, the world’s leading economic think-tank OECD downgraded its Eurozone growth forecast for 2017.
Other Currencies – Highlights
This morning, the Kiwi Dollar reversed its previous session gains and got knocked off a 2-week high level against the greenback. This came after the Reserve Bank of New Zealand (RBNZ) Governor, Graeme Wheeler, renewed his pledge for further easing in order to get inflation back up to the central bank’s target range. He also stressed that it is essential to have a weaker exchange rate and stated that the central bank will continue to watch closely the latest emerging economic data points. However, the RBNZ kept its official cash rate steady at 2.0%, as widely expected.
In other economic news, world dairy prices slightly advanced at the latest Global Dairy Trade auction. However, it was a major setback to see prices of New Zealand’s major export commodity, whole milk powder, record a drop. Going ahead, there are a couple of economic releases scheduled in New Zealand next week - the trade balance and building permits data - both for the month of August.