ECB Monetary Policy Meeting Minutes On Tab
Today is a busy day on the economic release front. In the UK, the just out data showed that the nation’s retail sales bounced back above expectations in July.
In the Eurozone, the region’s seasonally adjusted current account surplus narrowed in June. Going ahead, market participants await the release of the region’s consumer price index (CPI) and construction output data. In addition to this, the European Central Bank (ECB) will release its latest monetary policy meeting minutes. This will shed some light on the internal discussions of the central bank’s Governing Council. Across the Atlantic, the US data docket contains weekly jobless claims and the Philadelphia Fed manufacturing survey. A speech by the San Francisco Federal Reserve (Fed) President, John Williams, is also on tab.
Pound Sterling – UK Markets
The Pound has reversed its previous session losses and has soared against the US Dollar this morning to trade above the 1.31 handle, after the just out data showed that UK’s retail sales, the primary gauge of consumer spending, rebounded more than expected in July, as the sharp slide in the Pound post-Brexit vote encouraged tourists to spend. This comes after the British Retail Consortium’s retail sales monitor for July, released just last week, rose at its fastest pace in six months.
Yesterday, Sterling ended lower against the greenback, despite the release of upbeat UK employment data, as investors continued to reflect on the Atlanta Fed President Dennis Lockhart’s comments that there is a possibility of witnessing two interest rate increases this year. Data showed that people claiming out of work benefits in Britain surprisingly declined in July, suggesting little immediate impact from Brexit on the nation’s labour market. Meanwhile, the unemployment rate remained steady at 4.9% in the three months to June in line with forecasts, while the average earnings index, both including as well as excluding bonuses, registered a rise during the period.
US Dollar – US Markets
The greenback is trading lower against the shared currency and the Pound this morning after the US Fed’s July meeting minutes were more dovish than the market had expected. The Fed minutes indicated that policymakers were split on whether to raise interest rates at the meeting. Additionally, the minutes showed that the central bank was positive about the US economy and labour market despite weak economic growth in the first half of 2016. However, the rate setting committee noted that it would be prudent to assess more data in order to gauge the underlying momentum in the nation’s economic activity and labour market. In other economic news, the US Mortgage Bankers Association disclosed that the volume of mortgage applications fell last week.
Moving ahead, investors will keep a close eye on the US weekly jobless claims data scheduled later today, in addition to the Philadelphia Fed manufacturing survey for August as the regional manufacturing activity continues to struggle.
Euro – European Markets
The shared currency is trading mixed against the greenback and the Pound this morning. Data released earlier during the session showed that the Eurozone’s seasonally adjusted current account surplus narrowed and the French jobless rate declined in the second quarter. Going ahead, the Eurozone will shortly witness the release of a few important economic indicators. First up will be the region’s CPI data for July, which is expected to register the same pace of growth as June on an annual basis, while on a monthly basis the consumer prices are projected to drop. Next, the region’s construction output data for June is due to release. Finally, the ECB will publish its latest monetary policy meeting minutes. Last month’s ECB meeting was surprisingly muted, with most members of the Governing Council willing to opt for a wait-and-see approach after the Brexit referendum.
Yesterday, the Euro had a relatively calm session in the absence of significant market moving news.
Other Currencies – Highlights
The Australian Dollar is trading on a strong footing against the greenback this morning, hovering above the crucial 0.77 mark, after data showed that Australia’s unemployment rate dropped to a three-year low of 5.7% and that the economy created more than twice the number of jobs expected in July. However, the latest figures do not paint a very optimistic picture, as the nation’s job growth was entirely driven by part time employment, while full time jobs fell. However, the numbers did manage to break some records in the bargain - it is the largest loss of full time jobs since October 2013, but on the other hand, part time figures posted the biggest gain since February 2009. The surge in part time jobs can be attributed to the extra hiring for last month’s national election and this month’s census count.
However, Australia’s wage growth still remains at record lows. The nation’s wage price index rose just by an annual rate of 2.1% during the second quarter, its slowest rise since 1997, another not-so-pleasant accomplishment.