Subtle End to A Busy Week
This week ends on a subdued note, with nothing worth mentioning in the data space today. Investor focus is already pinned at next week’s US Federal Reserve (Fed) of Kansas City’s annual economic symposium in Jackson Hole, Wyoming, where the Fed Chairwoman, Janet Yellen, is scheduled to deliver a speech.
In the UK, the just released data showed that the nation’s public sector net borrowing recorded a surplus in July. German factory gate prices came in above expectations in July. The US data docket is devoid of any activity today.
Pound Sterling – UK Markets
The Pound is trading mixed against its major peers this morning. The just out data showed that UK’s public sector net borrowing recorded a rare surplus in July. Looking ahead, there are a slew of economic data points lined up for release in Britain next week. This includes the nation’s second quarter GDP, industrial orders and the GfK consumer confidence index data.
Yesterday, Sterling put up a surprise show and emerged as the shining star among its counterparts. The Pound spiked and reached its best multi-week high against both the greenback and the shared currency, after Britain’s retail sales report printed figures significantly higher than expected for July, both at the monthly and annual level. Core retail sales, which excludes automobile sales, also gained. This latest report is in sync with the UK’s upbeat inflation and jobs data which was released earlier this week, and indicates that hard economic data is yet to suffer post Brexit. However, the boost in retail sales was attributed mainly to tourist spending, thus clouding the indicator.
US Dollar – US Markets
The US Dollar is trading on a stronger footing against the shared currency and the Pound this morning, after yesterday’s data showed that jobless claims in the US fell more than expected last week. The number of Americans filing new applications for unemployment benefits stayed below the 300K level for the 76th week in a row, indicating that the nation’s labour market remains healthy. Meanwhile, the number of people continuing to receive jobless benefits edged up in the week ended August 06 but still remained at a historically low level. In other economic news, manufacturing activity in the US mid-Atlantic region rebounded and entered expansion territory in August. The marginal increase was in line with market expectations. Separately, the San Francisco Fed President, John Williams, advocated another interest rate increase in the coming months, citing that the US economy is in good shape and that waiting too long could prove costly for the nation’s economic outlook.
Going forward, the US Fed’s annual symposium in Jackson Hole, Wyoming, scheduled for next week, is on investors’ radars.
Euro – European Markets
The shared currency is trading lower against the US Dollar and the Pound this morning. Data released earlier in the session showed that German producer prices registered a slight growth in July - its lowest reading since April this year. However, the reading came in marginally better than expected.
Yesterday, minutes of the European Central Bank’s July monetary policy meeting showed that policymakers widely felt that it was premature to discuss any policy change at this stage. The members agreed that it is appropriate to take a more measured approach in the wake of the surprise Brexit vote, rather than hastily slashing the interest rate and expanding the quantitative easing programme, as the Bank of England did this month. On the data front, the Eurozone annual inflation confirmed its initial estimate and rose to an eight-month high level in July, as higher prices at restaurants and cafes helped offset the drop in prices of transport fuels and heating oil. However, the monthly variant damagingly fell. Further, the region’s construction output remained flat in June.
Other Currencies – Highlights
The Japanese Yen is trading on a weaker footing against the greenback this morning, registering its first drop this week amid renewed strength in the US Dollar. Data released earlier in the session showed that Japan’s all industry activity index bounced back above expectations in June. Looking ahead, market participants will witness the release of Japan’s national consumer price index and the Nikkei manufacturing PMI along with final readings of the nation’s leading and coincident indices data.
In other economic news, Japan’s merchandise trade surplus narrowed in July, as weak international demand led to a double-digit drop in exports. The nation’s exports have now dropped for ten consecutive months, leaving the economy and the government more reliant on shaky domestic demand to drive growth. Shipments of cars and ships as well as steel tumbled in July. Demand for Japanese goods have turned weak from end markets in Asia, Europe and North America, reflecting dismal global economic growth. Additionally, the final reading of Japan’s machine tool orders further declined in July.