British economy grew 0.6% in the last quarter of 2016
Today’s a busy day for economic releases on both sides of the Atlantic. There’s good news in the preliminary reading of the UK’s fourth quarter gross domestic product (GDP). Britain’s economy blew past expectations, registering a 0.6% increase during the period, backed by robust growth in the nation’s powerhouse services sector.
Later today, 2 economic figures from the US will be closely read for new insights into the macro trend at last year's close through to the start of 2017. First up is the Chicago Fed national activity index for December, followed by January's flash estimate of the services purchasing mangers’ index (PMI). Additionally, investors will look forward to the US weekly jobless claims, advance goods trade balance and new home sales data. In the Eurozone, a forward-looking indicator revealed that German consumer sentiment is set to improve in February.
Pound Sterling – UK Markets
The Pound initially traded at its highest level in six weeks against the greenback this morning, after the release of the better than expected GDP figures. Britain’s economy grew at a faster than expected pace in the fourth quarter of 2016, on the back of robust services sector and contribution from consumer-based industries. The upbeat figures once again proved that economic growth remained resilient in the aftermath of the Brexit vote. Moreover, the nation’s BBA mortgage approvals climbed in December. Going ahead in the day, UK’s data calendar shows its last economic release for the week i.e. CBI distributive trades survey data.
Yesterday, Sterling strengthened against the US Dollar, after registering an initial decline. UK’s Prime Minister, Theresa May announced that she will chalk out plans for exiting the European Union in an official policy document. On the macro front, the CBI’s industrial survey indicated that new domestic orders rose at the quickest pace since July 2014 during the past three months of 2016.
US Dollar – US Markets
The greenback is trading higher against the shared currency and the Pound this morning. The US data calendar sports a busy look today. In the session ahead, the flash estimate of the US Markit services PMI for January along with the nation’s weekly jobless claims and advance goods trade balance data will keep investors on their toes. In addition, data on US new home sales, wholesale inventories and the Chicago Fed national activity index are also up for release later today.
Yesterday, the US Dollar ended weaker against most of its major peers, as market participants continue to assess the first few days of Donald Trump’s Presidency and what could be its potential impact on the US economy. Investors continue to remain cautious as they await concrete evidence on his plans going forward. On the data front, the US mortgage application activity advanced last week to its highest level since June 2016. Meanwhile, the nation’s house prices rose in November.
Euro – European Markets
The Euro is trading lower against the greenback and the Pound this morning. Data released earlier in the session showed that German consumer confidence is set to strengthen further in February on high employment and income growth. Meanwhile, a report by Spain’s National Institute of Statistics showed that the nation’s unemployment rate dropped to a 7-year low in 4Q 2016, mainly backed by increased pace of job creation in Spanish agriculture and industrial sector. In other economic news, Italian retail sales unexpectedly declined in January. Going ahead, market participants will keep a watch on tomorrow’s release of German import price index data for December, which is anticipated to register a rise along with preliminary reading of French GDP data for 4Q 2016.
Yesterday, the Euro extended its losses for the third consecutive session against Sterling, following disappointing economic data. The CESifo group published its January business sentiment surveys for Germany, which came in below market consensus.
Other Currencies – Highlights
The Swiss Franc is trading on a stronger footing against the US Dollar this morning. Data released by the State Secretariat for Economic Affairs revealed that Swiss trade surplus narrowed in December. The nation’s imports recorded a decline, while exports rebounded in the same month. During the previous session, Switzerland’s UBS consumption indicator advanced in December. The indicator rose on the back of robust improvement in new car registrations, reaching an all-time high and providing further proof that the economy’s consumer driven growth prospects looks bright. Additionally, the ZEW survey of economic expectations index climbed in January compared to the previous month.
Looking ahead, there are no other key economic data points up for release in Switzerland this week. Market participants now look ahead to next week with the release of KOF leading indicator and SVME – PMI along with real retail sales data for further direction in the US Dollar - Swiss Franc currency pair.