Greek Parliament Approves New Bailout Deal
Anyone expecting data from the construction sector to lighten that downbeat mood from this week’s employment figures, expect to disappointed The just released data indicated that activity in Britain’s construction sector picked up, although lower than market expectations for June, lending strength to expectations of an improving economy.
I’m going to stick my neck out here. I’m cautiously optimistic over the soon to be released Eurozone economic data.Trading trends in Europe today will be influenced by Euro zone inflation and economic growth data that are likely to provide some indication whether the European Central Bank’s efforts to improve the health of the economy have worked. In positive news, the Greek Parliament earlier today voted to approve a new multibillion Euro bailout deal. Across the Atlantic, investors await US PPI, industrial production and consumer sentiment data for cues on Federal Reserve’s interest rate moves. I may live to regret this optimism next week, but hey, someone has to be!
Pound Sterling – UK Markets
The fightback has officially begun! Yesterday, the Pound managed to move above the 1.55 mark against the US Dollar, despite the absence of any notable UK macroeconomic indicators to influence trading in Sterling. Currency traders have been eyeing global macro and economic developments since the release of the UK employment report earlier this week to gauge the direction of the Pound against its key peers. The UK labour report mid-week had indicated a stronger than expected pickup in hiring, even though wage growth was slower than expected for the three month period until June. Investors are still counting on a potential rate increase sometime next year since some of the BoE policymakers have been relatively upbeat on growth prospects, FYI...relatively upbeat in central banker terms means delighted.
Data wise, it is a light calendar day in the UK today. The low-tier UK construction output report that came in just now indicated that output in the nation’s construction sector rose less than market expectations for June, as the sector recovered from a slowdown witnessed in April and May. The Pound has hardly responded to the construction activity data and is trading in tight range against the greenback. Ok, so more a subdued resistance, than a full scale fightback, but give it time.
US Dollar – US Markets
Positive data in the US job market has not gone unnoticed! The greenback is trading in a close range against the Euro this morning. Economic data from the world’s largest economy including producer prices, industrial production figures and University of Michigan’s consumer sentiment data, scheduled later in the day, might heighten the appeal of the US Dollar if the print is broadly positive and adds to speculation that the US Federal Reserve is on track to raise interest rates sooner than anticipated. Meanwhile, market forecast is for the producer prices in July to rise only marginally, reflecting subdued inflationary pressures in the nation in the wake of a renewed slide in oil prices. Industrial production in the US for the last month is expected to have remained at the same level as in June, maybe there is something to that well known Texan adage ‘Drill bay drill!’
I must confess, I was expecting a clean sweep in positive data from the US to end with impressive retail sales, no such luck! Data released yesterday indicated that US retail sales rebounded in July, albeit lower than market consensus as households pushed up purchases of automobiles and a range of other goods, reflecting strong momentum in economic growth at the start of the third quarter. Separately, latest weekly claims for first time unemployment benefits unexpectedly rose, still two out of three predictions isn't bad, cut me some slack!
Euro – European Markets
So to Greece. Greece is in focus today as the new bailout agreement reached earlier this week with the Euro zone creditors’ received parliamentary approval during a vote today, following a night long debate amongst the nation’s lawmakers regarding reforms related to tax rises and spending cuts in exchange for fresh aid. A meeting between the Euro group finance officials is also due later today, wherein they are expected to review the agreement with Greece. The cash strapped nation hopes to receive some funding ahead of a debt repayment to the ECB next week. Words fail me on this I’m afraid.
It’s all systems go with a busy calendar day in Europe today with key data releases including preliminary GDP data from the Euro zone and its various economies and also final July inflation figures from the Euro region. Data released earlier today showed that the German and French economies expanded at a slower than anticipated pace in the second quarter, despite a weak Euro lending support to exports. The Euro nudged lower against the US Dollar following the economic releases. Moving ahead, Euro zone growth and final inflation figures, due in a short while will draw significant market attention. Stay tuned!
Other Currencies – Highlights
Yesterday, the US Dollar – Canadian Dollar currency pair regained ground after upbeat economic releases in the US added to hopes that the US Fed would move its interest rate towards the upside as early as next month. In Canadian economic news, new house prices covering single-dwelling, semi-detached and row houses rose higher than market expectations for July, its largest monthly increase since August 2014. However, the upbeat housing data failed to lift the Loonie against the US Dollar. The Canadian Dollar was further pressured to the downside as oil prices sank to a multiyear low.
The Canadian Dollar is looking for direction against the greenback this morning. In the session ahead, investors will keep a tab on Canadian manufacturing shipments data scheduled later in the day. Also, a string of US economic releases due today will attract significant market attention.
Have a weekend!