BoE’s Monetary Policy Meeting in Focus
The BoE’s interest rate announcement, MPC minutes and the quarterly inflation report scheduled in a few hours will be under the spotlight today. Though the MPC is likely to keep the bank rate intact, the minutes could show a shift towards a hawkish sentiment amongst policymakers. Meanwhile, UK industrial and manufacturing production data just out showed that growth in the former unexpectedly slowed in June, while the latter rebounded marginally.
Across the Atlantic, the weekly jobless claims figures are due for release today and are expected to indicate that the broad trend for US labour market remains positive. In Europe, German industrial orders surged higher than market estimates for June as a weak Euro helped drive strong global demand.
Pound Sterling – UK Markets
The just released data indicated that UK industrial output dropped more than market expectations for June, as businesses that are increasingly reliant on exports continued to be impacted by a strong Pound and weak demand in the Euro zone. However, figures indicated some recovery in the manufacturing sector where production rose above market consensus. Although manufacturing production picked up during the month, growth in the output was near stagnant and suggests that the sector continued to act as a drag on the economy at the end of the second quarter.
The Pound has hardly reacted to the economic releases, as investors await the much anticipated BoE interest rate decision meeting which is scheduled in a few hours. While the British central bank is expected to retain its current policy, vote count along with the publication of quarterly inflation report could trigger volatility in the Pound against the major currencies. Also, NIESR GDP estimate for three months until July, due later today, could attract market attention.
US Dollar – US Markets
The greenback is trading on a firmer footing against the Euro this morning, amid a data thin economic calendar day in the US today. Trading in the US Dollar against its key peers will be guided by the only notable update in the US today, which is the weekly jobless claims data, in addition to economic updates from other key nations. Yesterday’s ADP employment report indicated that private sector small businesses added fewer than estimated jobs for July, marking the weakest gain in three months. Though the ADP numbers do not bode well for the upcoming labour market report scheduled on Friday, it does not directly imply that payrolls numbers will be soft. In search for more evidence, market participants will keep a tab on today’s weekly update on unemployment claims. The claims data could provide more support to July’s payrolls data, especially after jobless claims fell to a 40-year low in mid-July.
The US Dollar trimmed some its losses against the Euro yesterday after figures from the ISM non-manufacturing survey indicated that the US service sector in July expanded at its fastest rate in a decade.
Euro – European Markets
In a light calendar day in Europe, upbeat German factory orders data released earlier in the day failed to lift the Euro against its major currency counterparts. In a sign of robust growth in Euro zone’s largest economy, factory orders in Germany climbed higher than market expectations for June. The latest industrial orders in Germany, measured after adjusting for seasonal swings and inflation, picked up after sliding into negative territory for May, driven by an increase in export orders which offset a small drop witnessed in the domestic factory orders. Optimism among German businesses has improved in July after concerns surrounding Greece leaving the Euro bloc receded, while industries were supported by fall in energy prices, a weak Euro and lower interest rates.
The shared currency traded broadly higher against its major peers in yesterday’s trading session after survey data showed that services sector across some of the Euro zone economies continued to expand in July. However, gains in the Euro were capped after retail sales in the Euro zone retreated more than expected for June.
Other Currencies – Highlights
The Australian Dollar extended its losses against the US Dollar this morning after the unemployment rate in Australia climbed unexpectedly for July, as number of people entering the labour market exceeded new additions in the workforce. While, the jobless rate returned to a near thirteen year high seen at the start of this year, employment surged as companies added almost four times the number of jobs forecast for July. The mixed labour market data failed to bolster the Aussie Dollar against the major currencies earlier today. Earlier this week, the central bank Governor, Glenn Stevens, after keeping the cash rate unchanged, had stated that strong growth in employment and a steady rate of unemployment over the past year was somewhat consistent with the sub-trend growth in the nation and weak domestic demand.
The Aussie Dollar is currently trading lower against the US Dollar, as investors look forward to the US weekly unemployment claims data scheduled later in the day for further direction.