Blackout on public comments from US Fed members
The US data calendar commands attention during the final hours of this trading week. The nation’s consumer price index (CPI) and consumer confidence report is scheduled for release later today. The core annual inflation rate is expected to hold steady for August. With the crucial Federal Reserve (Fed) policy meeting next week, the Fed has imposed a blackout period on public comments by its members. Thus market participants will find ample time to digest today’s economic releases, without being distracted by comments from Fed members, who have done little to clarify the central bank’s monetary policy plans for the remainder of the year.
There is nothing worth mentioning data wise from Britain today. In the Eurozone, data released earlier in the day showed that the Italian trade surplus widened in July.
Pound Sterling – UK Markets
Yesterday, the Pound briefly slipped against the US Dollar, after the Bank of England (BoE) left the benchmark interest rate unchanged at a record low 0.25% and hinted that another rate cut is on the cards by the end of this year. However, the domestic currency managed to find its ground and had reversed its losses against the greenback towards the end of the day’s session, thanks to a series of downbeat economic reports from the US. Further, the BoE did not introduce any changes to its asset purchases scheme, after significantly expanding the programme last month. The central bank’s policymakers acknowledged the fact that the UK economy performed better than expected after the Brexit vote. However, they added that the BoE stands prepared to slash interest rate in November if the bank’s August forecast does not improve by that time.
Meanwhile, UK’s retail sales slightly dipped in August, following July’s bumper figure. Nevertheless, the numbers overall do not suggest any major decline in post-referendum consumer confidence.
US Dollar – US Markets
The greenback is trading on a stronger footing against the Pound and the common currency this morning. Later, market participants will closely watch the US consumer price inflation and the
Reuters/Michigan consumer sentiment index, to monitor further trends in the greenback.
Yesterday, the US Dollar declined against most of its major peers, after a spate of lacklustre US economic data reduced prospects of a near-term interest rate increase by the US Fed. Data revealed that the US advance retail sales dropped more than anticipated in August, putting a pause to recent consumer spending strength that has supported the economy. In other economic news, industrial production fell more than estimated in August, highlighting tepid demand for manufactured goods and dampening optimism over the health of the nation’s economy. Moreover, the US capacity utilisation registered a decline in August. On the other hand, the number of Americans filing for unemployment benefits rose less than anticipated last week, indicating that employers remained comfortable with current staffing levels.
Euro – European Markets
The shared currency is trading mixed against the US Dollar and the Pound this morning. It is a data-light economic calendar in the Eurozone today, with only a couple of data points in view. For starters, Italian trade surplus widened in July. The Eurozone’s labour cost data for second quarter is due sometime today. Data releases will slowly start to gain pace towards the latter half of next week. These will include preliminary reports on the Eurozone’s consumer confidence along with manufacturing and services PMI for September. Additionally, the European Central Bank’s economic bulletin is due next week.
Yesterday, the Euro ended lower against its major peers. In economic news, the Eurozone’s consumer prices rose in line with expectations for August. At the annual level, the region’s final CPI offered no surprises and confirmed its flash reading. Separately, the Eurozone’s seasonally adjusted trade surplus narrowed for the third straight month in July, led by a fall in exports.
Other Currencies – Highlights
The Australian Dollar is trading on a weaker footing against the greenback this morning. During the previous session, the Australian Dollar took a bullish break from its 2-day decline and ended above the 0.75 mark against the US Dollar, following the release of softer than expected US retail sales figures. On the domestic data front, Australia’s unemployment rate fell to a 3-year low of 5.6% in August. This came despite the number of people employed in the country dipped during the period. The mismatch occurred as less numbers of people actively scouted for jobs last month. Separately, the Melbourne Institute’s gauge of Australian inflation expectations over the next 12 months weakened for a second consecutive month in September.
This weekend marks the end of an era as the incumbent RBA Governor, Glenn Stevens, hands over the keys to the Deputy Governor, Philip Lowe, after being at the helm for a decade. Next week, Philip Lowe is scheduled to appear before the parliamentary economics committee in his first official appearance as the Chief.