German Data Dominates This Week
German economic data points will command maximum attention this week as the nation’s trade balance, consumer price index and the preliminary estimate of second quarter GDP are lined up for release. In the UK this week, focus will be on the nation’s NIESR GDP estimate for the three months ending in July, as it is usually a good predictor of actual GDP growth. Meanwhile in the US, the only major data release will come at the end of the week in the form of retail sales and the University of Michigan consumer confidence index.
Today the data calendar remains relatively light. Britain will witness its first economic data for this week later in the day with the BRC retail sales monitor scheduled for release. In the Eurozone, the Sentix investor confidence index registered a greater than expected rise in August. Across the Atlantic, the US labour market conditions index for July is due today.
Pound Sterling – UK Markets
The Pound is trading lower against its major peers this morning. The sole economic release in the UK today is the BRC retail sales monitor data for July, which is due overnight. The indicator had dipped in June, recording its third decline in four months. The British economic calendar is set to heat up as this week progresses, with some of the most crucial data points scheduled for release. This includes the nation’s industrial production, trade balance, housing price data and the NIESR GDP estimate for the three months ended July.
On Friday, Sterling dropped against the US Dollar to a three-week low level, as robust US nonfarm payrolls data bolstered the case of an interest rate increase by the US Federal Reserve (Fed) this year and sent the greenback soaring across the board. This data came just one day after the Pound dropped more than 1.5% against its American counterpart, following the Bank of England’s decision to cut the key interest rate to a record-low of 0.25% and implement a host of easing measures.
US Dollar – US Markets
The greenback is trading higher against the Euro and the Pound this morning. On Friday data indicated that US nonfarm payrolls jumped in July for a second month, a sign of underlying strength in the nation’s labour market, despite slow growth in the broader economy. The solid jobs report has added to the positive momentum set by the June jobs data, after a weak job growth in May, which raised fears of slowdown in the economy. A tighter jobs market also pushed up wages as average hourly earnings rose more than expected in July, bolstering the probability of a Fed interest rate increase this year. Meanwhile, jobless rate in the US remained steady at 4.9% in July, against expectations of decline to 4.8%.
Last week other economic data showed that the US trade deficit swelled again and hit a ten-month high level in June, driven up by a large increase in oil imports and consumer goods and with a stronger greenback continuing to dent the nation’s export growth.
Euro – European Markets
The shared currency has reversed its previous session losses against the Pound this morning. The just out data showed that the Eurozone’s Sentix investor confidence index advanced more than expected in August, after posting a sharp drop in the previous month following the Brexit vote. Data released earlier during the session showed that German industrial production rebounded in June, after a surprise contraction in May. Going ahead, market participants look forward to the release of Germany’s trade balance and consumer price index along with the Eurozone’s second quarter GDP and industrial production data, all scheduled to release this week.
On Friday, the Euro lost ground against the greenback for the third consecutive session, amid a broad strength in the US Dollar following an upbeat US jobs market report. Closer to home, German factory orders unexpectedly declined in June, as demand for investment goods from within the Eurozone dropped in the run-up to Britain’s referendum on European Union membership.
Other Currencies – Highlights
The Japanese Yen has extended its previous session losses against the US Dollar this morning, as the greenback continues to maintain its firm tone after a strong US jobs report. Earlier in the session, data showed that the preliminary reading of Japan’s Eco watchers survey of current conditions and outlook index advanced above expectations in July. Further, Japan recorded its largest current account surplus since 2007 in June, mainly led by reduced imports and rising tourism revenue. Separately, the Bank of Japan’s (BoJ) summary of opinions from its July 28-29 meeting revealed that the board members were split over the limit of the central bank’s current monetary policy easing framework. At the meeting, the BoJ doubled purchases of exchange-traded funds, but the move fell short of investor expectations.
In other economic news, Japan’s labour cash earnings rebounded more than anticipated in June. Additionally, the nation’s flash coincident index advanced, while the leading index held steady in June. Looking ahead, Japan’s machine tool orders and tertiary industry index data are due for release this week.