ECB President Mario Draghi makes a speech later today
Today brings with it a whole host of economic releases. All across the globe, economic calendars are buzzing with data – some have already seen the light while others are waiting to unfold. In Britain, the just out data showed that consumer prices rebounded less than expected in August.
In the Eurozone, German consumer price index (CPI) registered a flat reading for August. The Eurozone and German ZEW surveys, and the European Central Bank (ECB) President Mario Draghi’s speech, are all due in some time. The US data docket is significantly lighter with the NFIB small business optimism survey results.
Pound Sterling – UK Markets
The Pound has reversed its previous session gains and is trading lower against its major peers this morning, after the just out data showed that British consumer prices rebounded less than expected in August. On an annual basis, the nation’s inflation held steady, defying expectations for a small rise on the back of a weaker Pound. Additionally, UK’s core CPI came in unchanged for August. Britain’s CPI announcement comes during a busy week for the nation’s economy, with the latest employment data being released tomorrow and the Bank of England's interest rate decision along with UK’s retail sales report closely following the next day.
Yesterday, Sterling ended higher against the US Dollar and the shared currency. On the data front, the Conference Board’s leading economic index came in flat for August. Separately, the British Chambers of Commerce downgraded its UK forecasts for the current and the next 2 years, as it feels that the Brexit vote will weaken consumer expenditure and investments in the country.
US Dollar – US Markets
The greenback is trading mixed against the Pound and the common currency this morning. Moving ahead, market participants will closely monitor the US monthly budget statement and the NFIB business optimism index for August, scheduled to be released later today, for further direction in the greenback. Meanwhile, the US monthly budget deficit is expected to narrow in August. Later this week, market participants will focus on the nation’s advance retail sales, industrial production, weekly jobless claims and consumer price inflation data.
Yesterday, the US Dollar fell against most of its major peers after the Federal Reserve (Fed) Governor, Lael Brainard, reiterated her dovish views and indicated that the case to tighten monetary policy in the near term looked less compelling. She added that the US labour market was not yet at full strength and expressed worries about the likely impact that global difficulties might have on the nation’s economy. Her comments came on the same day that the Atlanta Fed President, Dennis Lockhart, called for a “serious discussion” on whether to raise the rate next week.
Euro – European Markets
The shared currency is trading higher against the greenback and the Pound this morning. Data released earlier in the session showed that Germany’s final reading on consumer prices remained flat in August. The data confirms that inflation in Germany remains significantly below the European Central Bank’s target of close to but below 2.0%. Further, Spanish consumer prices rebounded in line with market expectations in August. Separately, Italian industrial output recovered better than expected in July after falling in the previous 2 months. This provided some relief to Italy’s faltering economy, which stagnated in the second quarter and continues to underperform in comparison to its other Eurozone counterparts.
Things will start heating up further on the economic data front, as there is a string of data points lined up for release in the Eurozone later today. The sentiment update from ZEW will offer an early read on September’s macro profile in the Eurozone and Germany. A speech by the ECB President, Mario Draghi, is also scheduled in a few hours.
Other Currencies – Highlights
The Australian Dollar is trading lower against the greenback this morning, following comments from a Reserve Bank of Australia (RBA) official on the need for a weaker domestic currency and after a mixed outcome of business surveys. The RBA’s Assistant Governor, Christopher Kent, indicated that the Australian Dollar has not fallen as much as expected in response to the cuts in interest rate. However, he also stated that Australia’s recent economic growth has been stronger than that projected by the central bank. On the data front, a report by the National Australia Bank showed that Australian business conditions slightly softened, while business confidence advanced in August.
Meanwhile in China, Australia’s largest trading partner, a couple of gauges tracking different corners of China’s economy beat street expectations in August, following a hiccup in July. The nation’s industrial production rose at its fastest pace in 5 months, as demand for products from coal to cars rebounded. Moreover, the nation’s retail sales climbed above expectations in August. Separately, the annual fixed-asset investment held steady at a 16-year low level in August.