It’s A Busy Day for Global Economic Data
Today’s global economic calendar looks completely data packed. In the UK, the just released data showed that the nation’s net consumer credit and mortgage approvals recorded a drop in July, while later today market participants look forward to Britain’s GfK consumer confidence index for August.
The Eurozone will witness service, industrial, consumer, business and economic sentiment surveys for August, which are useful in providing insight into how the economy could perform during the final four months of the year. Inflation data from Germany is also on the wire today, ahead of tomorrow’s preliminary Eurozone reading for August. Across the Atlantic, investors await US Federal Reserve (Fed) Vice Chairman Stanley Fischer’s speech, along with the US consumer confidence index for August, to gain more clarity about the central bank’s next move.
Pound Sterling – UK Markets
The Pound is trading lower against its major peers this morning. The just out data showed that UK’s net consumer credit declined more than expected in July. Also, the nation’s mortgage approvals continued to stay weak in July, after its downward trend began in January this year. Going ahead, the next big UK economic data awaited is the nation’s GfK consumer confidence index. After recording a weak figure in the past two readings, the index is expected to remain in negative territory for August, albeit likely to improve on its July reading.
Yesterday, trading conditions in the UK currency market remained subdued due to a public holiday. On Friday, data showed that Britain’s Office for National Statistics confirmed a previous estimate that UK’s GDP growth picked up during the second quarter of this year. The report further stated that the British economy was able to power ahead in the months running up to the European Union referendum vote, mainly due to a rise in consumer spending.
US Dollar – US Markets
The greenback is trading on a stronger footing against the Euro and the Pound this morning as investors continue to digest last week’s comment from the Fed Chairwoman, Janet Yellen, that interest rate could be raised sooner than expected. Janet Yellen, at the Jackson Hole summit of central bankers, sketched an upbeat assessment of the US economy and inflation with a solid job market and strength in consumer spending. Although the Fed Chief was somewhat hawkish, she suggested to rely on incoming data. Meanwhile, market participants expect that a strong August payrolls report will put September firmly on the table for the next rate increase.
In other economic news, data on Friday showed that the second estimate of the US second quarter GDP came in marginally lower than its previous estimate, but remained in line with forecasts. Separately, consumer spending in the nation climbed for a fourth consecutive month in July, led by strong demand for automobiles, thus highlighting that domestic consumption could continue to drive the nation’s economic growth over the second half of 2016.
Euro – European Markets
The shared currency is trading mixed against the US Dollar and the Pound this morning. Data released earlier in the session showed that the German import price index surprisingly advanced in July. Further, Italian retail sales rose in line with market expectations in June. Going ahead, it seems to be a pretty busy day in the Eurozone with a slew of economic data points lined up for release in a few hours. This includes the region’s consumer confidence, business climate and economic sentiment indicator, all for the month of August, and later in the day investors will direct their attention towards Germany, with the nation’s consumer price index (CPI) up for release.
Yesterday, data indicated that Italian consumer confidence dropped to over a one-year low level in August. All components of the confidence index, including manufacturing confidence, declined during the period. Moreover, the nation’s business confidence index plummeted to an eighteen-month low level in August.
Other Currencies – Highlights
The Japanese Yen has extended its decline against the greenback for the fifth consecutive session this morning, recording its longest losing streak in five months. Last week, the US Fed Chairwoman, Janet Yellen, indicated that the case for tightening US monetary policy has strengthened, while on the other hand the Bank of Japan (BoJ) Governor, Haruhiko Kuroda, reiterated his readiness to ease monetary policy further, thus highlighting the policy divergence between these two central banks.
On the data front, Japan’s unemployment rate surprisingly dropped to its lowest level since May 1995 in July. Separately, the nation’s overall household spending declined for the fifth consecutive month in July. However, it registered a less than expected fall, offering a glimmer of hope to Japan’s policymakers, as they strive to pull the world’s third largest economy out of stagnation. Additionally, retail sales advanced above expectations in July. While the latest batch of Japan’s economic data looks encouraging, the BoJ is not expected to stand pat at its monetary policy meeting next month while inflation still remains weak.