Britain’s mortgage approvals fall to lowest level in 21 months
Today the global economic calendar is chock-a-block. In the UK, just released data showed that the nation’s consumer credit rose above expectations for August. However, mortgage approvals recorded a drop during the same month.
The Eurozone and US data calendars will slowly gather steam as the day progresses. The Euro region has a string of first-tier data points due, in the form of consumer confidence and business climate index. Across the Atlantic, the Federal Reserve (Fed) Chairwoman, Janet Yellen, will speak at a minority banking conference about banking issues, though investors are interested to see if she veers towards any monetary policy related concepts. US weekly jobless claims and personal consumption expenditure data are also due out today.
Pound Sterling – UK Markets
The Pound has extended its previous session losses against the US Dollar this morning. The just out data showed that UK’s mortgage approvals fell in August to their lowest level since November 2014, while net consumer credit advanced. Britain’s GfK consumer confidence index is up for release later today and is expected to post further improvement for September.
Yesterday, Sterling’s recovery against its major peers was cut short by the Bank of England’s (BoE) Deputy Governor, Minouche Shafik, who called for further monetary policy easing to ensure that UK’s economic slowdown does not turn into something more destructive. However, she stopped short of providing a particular timeline for any further action on interest rate. She further added that although the bank’s future actions hinge on incoming economic data, it would be wiser to act pre-emptively rather than wait and face the music later.
US Dollar – US Markets
The US Dollar strengthened against most of its major peers yesterday. Data revealed that US durable goods orders flattened out in August after a sizable increase in July, suggesting weakness in the nation’s manufacturing sector, and also indicated that the economy continues to be restrained by sluggish business spending. Janet Yellen made no specific comments on monetary policy while stressing that the country’s banking conditions had strengthened considerably since the financial crisis. Separately, the IMF stated that it would once again slash its US growth forecast for 2016, following “economic malpractice” that would obstruct growth.
The greenback is trading positively against the Pound and Euro this morning. The US annualised GDP, weekly jobless claims, goods trade balance and pending home sales data, scheduled to be released later today, will attract a significant amount of market attention. Market participants will also keep a close eye on both US Fed Chairwoman Janet Yellen and Atlanta Fed President Dennis Lockhart’s speeches later today.
Euro – European Markets
The shared currency is trading mixed against the greenback and the Pound this morning. Data showed that German unemployment rate remained at a record low level of 6.1% in September. However, the number of unemployed people in Germany rose for the first time this year. In other economic news, Spanish retail sales advanced less than expected on an annual basis in August. In a few hours, a string of crucial economic data points is scheduled, including the Euro region’s consumer confidence and business climate index and the preliminary reading of German consumer prices data - all for the month of September.
Yesterday, the European Central Bank (ECB) President, Mario Draghi, defended the central bank’s
ultra-loose monetary policy during a hearing at the Bundestag - Germany's lower house of parliament. He also added that if the ECB's decisions continue to be attacked, the central bank might be forced to take additional extensive measures to be effective.
Other Currencies – Highlights
The Canadian dollar has reversed its previous session gains and is trading lower against the greenback this morning. During the earlier session, the Canadian dollar strengthened to a 4-week high level against its US counterpart as oil prices soared on a deal by major oil producers to limit output. The member countries that make up the Organisation of the Petroleum Exporting Countries reached an understanding that a crude oil production cut is required to lift global oil prices. Oil exporting Canada has been facing lacklustre growth following the slump in crude prices, prompting the Bank of Canada (BoC) to slash interest rates twice last year. Separately, the BoC Governor, Stephen Poloz, indicated earlier this week that global central banks might find it challenging to meet their inflation targets as the world economy becomes more integrated with increased international trade.
The Canadian economic calendar closes this week with the nation’s GDP data for July and is expected to register a slower rate of growth compared to June.