British Q3 GDP Meets Expectations
The second estimate of UK’s third quarter gross domestic product (GDP) just crossed the wires and didn’t spring up any surprises as it came in line with expectations. Further ahead, market participants await the Confederation of British Industry’s distributive trades survey data, due in a few hours.
In the Eurozone, French consumer morale remained steady at a 9-year high level in November. Across the Atlantic, back from the holidays, investors look forward to the release of US advance goods trade balance and Markit services PMI later today.
Pound Sterling – UK Markets
The Pound is trading lower against its major peers this morning. The just out data showed that second estimate of UK’s third quarter GDP stands unrevised at 0.5%. The preliminary GDP reading had come in above expectations. Later today, the Confederation of British Industry is slated to release its distributive trades survey which indicates short-term trends in Britain’s retail and wholesale distribution sector. The index is expected to slide in November. Looking further ahead, there are several significant data points up for release next week. These include UK’s consumer credit, GfK consumer confidence, manufacturing and construction PMI’s along with the Bank of England’s financial stability report.
Yesterday, Sterling ended higher against the US Dollar for the second consecutive session, after Britain’s mortgage approvals blew past investor expectations to notch a 5-month high level in October. The figures chimed with robust retail sales data earlier this month, which hit a 14-year high in October, thus underscoring the fact that the shock Brexit vote has failed to dent consumer spending plans.
US Dollar – US Markets
The greenback is trading lower against the shared currency and Pound this morning. Today, the American market opened for business after the Thanksgiving holiday and is set to witness two important economic releases. Investors look forward to advance goods trade balance, which is anticipated to post a wider deficit in October. Closing off the week’s releases will be Markit’s services PMI which is expected to remain at its current level in November. In the upcoming week, investors will witness a slew of economic releases from the US, namely annualised gross domestic product data, consumer confidence, personal income & spending along with the most crucial unemployment rate and nonfarm payrolls data. A strong payrolls data will further strengthen expectations for a rate increase by the Federal Reserve at its December meeting.
The US Dollar traded mostly higher against a basket of major currencies yesterday, being supported by the hawkish tone of the Federal Open Market Committee’s November meeting minutes, which indicated a rate increase to come relatively soon.
Euro – European Markets
The shared currency has reversed its previous session losses and is trading higher against its major peers this morning. Data released earlier during the session showed that French consumer confidence remained steady in November, after reaching its 9-year high level last month. Meanwhile in Italy, industrial orders as well as industrial sales tumbled in September. Going ahead, market participants await the release of Italian retail sales data, due in a few hours.
Yesterday, the Euro dropped to its lowest level since March 2015 against its US counterpart, as the greenback strengthened, amid increasing bets for higher US interest rates and inflation following upbeat US economic data. Closer home, fear ahead of the Italian constitutional referendum and growing uncertainty over the Eurozone’s financial and political situation have kept the Euro under pressure. On the data front, revised German GDP data was confirmed at 0.2% for the second quarter, with exports continuing to be a drag on the nation’s economy. Further, a forward-looking indicator showed that German consumer confidence is set to rise in December.
Other Currencies – Highlights
The Japanese Yen is trading higher against the US Dollar this morning, rising for the first time in four sessions. Data released earlier in the session showed that Japan’s core consumer prices marked their eighth straight month of annual decline in October, its longest streak since 2011, amid sluggish consumer spending and falling global energy prices. This comes just a few weeks after the Bank of Japan (BoJ) pushed back the timeline for hitting its 2.0% inflation target. The nation’s government and central bank have joined forces and tried pursuing a host of measures to reverse a deflationary spiral of falling prices and lacklustre growth, but in vain. Market participants are now growing increasingly worried about Prime Minister, Shinzo Abe’s spend-for-growth policy.
In other economic news, Japan’s flash Nikkei manufacturing PMI edged lower in November, as growth in new orders eased, signalling that the sector has lost some momentum. However, it remained above the 50-mark threshold. Separately, final figures from the Cabinet Office showed that Japan’s leading index dropped, while the coincident index advanced for September.