EU Leaders to Discuss Game Plan Today
This week begins with an extremely light global economic data calendar. The Federal Reserve (Fed) Bank of Kansas City’s annual economic talkfest at Jackson Hole is set to dominate headlines throughout the week ahead, as the tug of war over whether to lift US interest rate gathers intensity. With the Olympic spirit still burning bright, it remains to be seen whether the US Fed Chairwoman, Janet Yellen, like a field judge in the track and field events, will start the race for an interest rate rise as soon as September.
Later today, Italian Prime Minister, Matteo Renzi, will host German Chancellor, Angela Merkel, and French President, Francois Hollande, on an island off the coast of Naples for a second round of trilateral talks before an informal European Union (EU) summit in September. The three leaders had held similar talks in Berlin exactly four days after the 23rd June UK referendum vote.
Pound Sterling – UK Markets
The Pound is trading higher against the US Dollar and the shared currency this morning. There are no economic releases scheduled in the UK today. Later in the day, German Chancellor Angela Merkel, French President Francois Hollande and the Italian Prime Minister, Matteo Renzi, will meet at Ventotene Island in Italy, to hold talks about Brexit, European Union (EU), and migration. The nation will witness the release of its first data point tomorrow in the form of the Confederation of British Industry’s (CBI) industrial trends orders data for August. This will be followed by the CBI distributive trades survey and the BBA mortgage approvals data. The main event will come at the end of this week, when the preliminary estimate of Britain’s second quarter GDP growth rate will be out.
On Friday, Sterling lost ground against its major peers. On the data front, UK’s public sector net borrowing registered a surplus in July. Separately, reports emerged that Article 50, the official procedure to initiate UK’s official exit from the European Union, will be invoked by April 2017.
US Dollar – US Markets
The greenback is trading mixed against the shared currency and the Pound this morning. Meanwhile, Fed policymakers remain upbeat about the US economic growth prospects and continue to root for a near term increase in interest rate. Over the weekend, Fed Vice Chairman, Stanley Fischer, stated that the central bank is close to meeting its job and inflation targets and signaled that a 2016 interest rate rise is still on the cards since it tightened its monetary policy for the first time in nearly a decade in December last year. Additionally, he remained positive about the US labour market as jobs growth had been resilient and unemployment rate stayed close to Fed’s estimate.
Going ahead, market participants look forward to a highly anticipated speech by the Fed Chairwoman, Janet Yellen, this week in Jackson Hole, Wyoming. Although some policymakers have concerns about the US inflation rate, the Chairwoman is expected to give clues on timing for a possible interest rate rise.
Euro – European Markets
The shared currency is trading lower against its major peers this morning. Today, the leaders of Germany, France and Italy will converge to discuss the way ahead for the EU after Britain’s shocking decision to exit the region. The Eurozone trading calendar remains absolutely empty for today. Next in focus for the region remains a slew of economic releases, all scheduled this week. This includes the flash manufacturing & service PMI’s from across the Euro area, the Eurozone consumer confidence index and German GDP & Ifo survey data, along with Italian retail sales & consumer price index. Separately, the Euro – US Dollar currency pair will be influenced by the Jackson Hole Economic Policy Symposium, where the US Fed Chairwoman, Janet Yellen, is scheduled to deliver a speech later this week.
On Friday, data showed that German factory gates prices rose above expectations in July. However, on an annual basis, the nation’s producer prices continued to post a negative reading last month.
Other Currencies – Highlights
The Canadian Dollar has extended its previous session losses against the greenback this morning. This week looks relatively thin in terms of economic releases for Canada, with the nation’s wholesale sales data for June being the sole data point, which is scheduled to be out later today. This indicator had registered a forecast-beating impressive figure in May and the latest number is expected to come in slightly weaker.
On Friday, the Canadian Dollar recorded its first decline against the US Dollar in ten consecutive sessions after the release of disappointing retail sales and inflation data from Canada. The nation’s consumer price index (CPI) dropped more than expected in July, pulled down by cheaper gasoline prices, even as the cost of food and shelter climbed. Meanwhile, the annual inflation rate cooled as expected in July. Separately, Canada’s retail sales surprisingly fell in June, as seven of the eleven subsectors reported a drop in sales during the month. Gains for sellers of automotive, gasoline, electronics and health stores were dwarfed by losses in other categories.