In focus today is the second quarter Euro zone GDP data which is expected to confirm that the economy expanded at a weaker pace compared to the first three months of this year. In other European data, German trade surplus widened surpassing market expectations for July as both exports and imports rebounded more than expected.

In the UK, BRC retail sales data was much weaker than expected for August as bad weather dampened sales of the nation’s retailers. Across the Atlantic, US NFIB small business optimism index, Fed’s labor market conditions index and consumer credit for July are set to be released later in the day.

Pound Sterling – UK Markets

The Pound has picked up pace and is trading on a firmer footing against its major currency counterparts this morning. Amid an absence of any significant domestic macroeconomic indicators in the session ahead, focus will likely be on sentiment in global financial markets. Going forward, the UK industrial production and trade deficit figures, scheduled tomorrow, are expected to draw notable market interest. Also, traders will remain on toes with the Bank of England’s interest rate decision and NIESR’s GDP estimate for the three months until August, due in the coming days, for further cues on whether the BoE will tighten its monetary policy at the turn of next year.

Overnight BRC’s shop price data showed that retail spending in the UK stagnated last month, despite higher real wages, as muggy weather towards the end of August dampened demand for retailers’ new autumn and winter fashion collections.

US Dollar – US Markets

The US Dollar is trading broadly lower against its high yield counterparts this morning as risk appetite was buoyed by positive economic data released across major Asian nations overnight. Later in the day, a slew of US economic releases would mark the start and set the tone for macro expectations this week, commencing with NFIB’s business sentiment data which will be eyed to gauge the health of small firms in the nation. Also, its job creation sub index will shed further light on small firms’ job growth in the third quarter.

Markets also await Federal Reserve’s labour market conditions index later today to gauge the broad trend in the labour market and is anticipated to show a slight improvement for August from the previous month’s reading. Another key update for the US economy today is July’s consumer credit growth.

Euro – European Markets

The Euro – US Dollar currency pair edged above the 1.12 mark earlier today following the release of China’s upbeat trade data. However, the common currency gave up part of its early gains against the greenback and has moved lower against the Pound. Data released earlier today showed that German trade surplus widened more than market consensus for July. However, the upbeat data had limited impact on trading in the Euro.

Euro zone’s macroeconomic calendar is back in the spotlight today, with the revised estimate of the region’s second quarter GDP scheduled for release. The second estimate of Euro zone’s economic growth data for the April – June period is expected to be in line with the preliminary estimates. The ECB had last week cautioned that Europe's economic recovery would continue, albeit at a somewhat weaker pace than expected and this was reflected in its downward revision of the inflation and the growth forecasts for the year.

Other Currencies – Highlights

Japan’s revised GDP figures released earlier today indicated that the world’s third largest economy contracted less than initially estimated for the second quarter of this year. The Japanese economy continued to struggle from soft domestic demand, while slowing growth in China weighed on its exports. Also, capital expenditure fell more than the original forecast, clouding the outlook for the Japanese economy. The feeble growth data is expected to keep policymakers under pressure to step up the pace of easing at its October meeting. The latest GDP number has presented another challenge to Prime Minister Shinzo Abe, who has won a second term as leader of the Liberal Democratic Party. In positive news, Japan’s current account recorded its largest surplus in five years for July, underpinned by a weaker Yen that boosted income from overseas investments. However, the upbeat data failed to lift the Japanese Yen against the US Dollar.

The US Dollar – Japanese Yen currency pair is currently hovering close to the 120.00 mark, as the greenback staged a strong rebound against the JPY amid a risk-on sentiment in markets.