Turmoil in the major equity markets has fuelled concerns about the economic growth outlook for the global economies. Meanwhile, the CBI yesterday lifted its growth outlook for the UK economy for the rest of year citing improved worker productivity and household spending in the economy amid a backdrop of low inflation and strong wage growth. Going forward, markets await a further estimate of second quarter UK GDP later in the week.

In Europe, the upbeat Ifo business conditions survey report and second quarter GDP data released earlier today have offered a positive growth outlook for the German economy. Across the Atlantic, the preliminary Markit PMI data for the services sector, monthly update on new home sales and consumer confidence data will attract market interest.

Pound Sterling – UK Markets

The Pound has recovered most of its previous session losses against the Euro this morning. Sterling has managed to hold on to its gains against the greenback, as fading expectations of an imminent tightening of the monetary policy by the US Federal Reserve has slightly dampened the attractiveness of the US Dollar. Meanwhile, a continued slump in oil prices weighing on Britain’s mining industry is keeping the upside in the Pound – US Dollar currency pair restricted. On the macro front, it is a quiet week with regards to UK economic releases, with hardly any major updates that have the potential to trigger volatility in the Pound against its key peers. The only exception is the further estimate of second quarter domestic economic growth data, scheduled in the final session of this week, which is anticipated to attract significant market attention.

In some positive news, the CBI yesterday revised upwards its GDP forecasts for 2015 and 2016, and now sees a growth of 2.6% in 2015 and 2.8% in 2015, encouraged by robust growth in household spending and upbeat economic data since its last forecasts.

US Dollar – US Markets

The US Dollar has managed to regain lost ground against the shared currency this morning, with the Euro – US Dollar currency pair having slipped below the 1.16 mark. The greenback traded at multi month lows against the Euro yesterday, as currency traders monitored the turmoil in the Chinese stock exchange amid worries that weaker growth in China would act as a drag on the global economy, prompting the US Fed to push forward raising the benchmark interest rate until next year.

An early update for the services sector in the US, scheduled later in the day, would provide clues on whether the US macro trend is faltering or not. Expectations are that activity in the nation’s dominant services sector would show a strong rate of growth for August albeit at a slightly slower pace compared to the previous month. Additionally, a pair of US housing market releases, namely new home sales and S&P’s home price indices, are anticipated to suggest that growth in the nation’s real estate market is accelerating heading into the second half of this year.

Euro – European Markets

Data released earlier in the day confirmed that the German economy expanded in line with initial estimates for the April – June period and faster than the 0.3% growth witnessed in the first quarter. A breakdown of the German GDP data revealed exports led growth in the economy for the second quarter of this year, while weak domestic demand limited expansion. Today’s upbeat second quarter German GDP data highlights the risks that slower growth in Germany’s third largest trading partner, China could have on the German economy. If China experiences a long-term slowdown, German exporters will feel the heat and could be a drag on economic growth in the Euro zone’s biggest economy. Separately, the Ifo’s survey of both current and expectations indices for Europe’s main economy surged higher than market expectations for August, suggesting that sentiment among German businesses appears encouraging.

Meanwhile, the Euro has chosen to shrug off the upbeat German economic releases and is currently trading on a weaker footing against the major currencies.

Other Currencies – Highlights

This morning, the New Zealand Dollar has recovered from its multiyear lows witnessed against the US Dollar in yesterday’s trading session. The Kiwi Dollar was lifted against the US Dollar earlier today, after concerns following yesterday’s aggressive selloff in Chinese equity market began to recede. The NZD received support from rising prices for dairy products. On the economic data front, a third quarter survey report by the Reserve Bank of New Zealand released earlier in the day revealed that inflation expectations for the next 12 months have surged higher than the rate seen in the previous three month survey. The survey results also supported the upward momentum of the New Zealand Dollar against the greenback.

Moving ahead, gains in the Kiwi Dollar against the US Dollar will likely be determined by New Zealand’s trade data and a slew of US economic releases including flash services PMI, new homes sales and consumer confidence numbers for August which are scheduled later today.