The just out BBA data revealed an unexpected drop in the number of mortgage approvals while the UK public sector borrowed more than expected for August. The Pound witnessed some pressure before these releases, but has surprisingly arrested further decline against the majors. With little on the domestic economic calendar this week, investors will keep a close watch on this week’s speech from the BoE Governor, Mark Carney, for further cues on the future policy outlook.
The latest PMI readings across major European economies has offered some support to the Euro this morning. Across the Atlantic, investors will keep a close watch on today’s Markit manufacturing activity report along with speeches from few US Fed officials for further direction.
Pound Sterling – UK Markets
Data just released by the BBA indicated that the numbers of mortgage approvals in the nation declined unexpectedly for August. With the UK housing market showing a mixed trend recently, it can be inferred that the lending measures announced by the BoE in June have lent support to control the pace of growth in the nation’s housing sector. Additionally, another report showed that the public sector borrowed more than expected for August. With no major economic data in the UK today, markets will keep a close watch on macro releases in the US along with some speeches from Fed officials for further direction. Additionally, markets will keep a tab on this week’s BoE Governor, Mark Carney’s speech for indications on the monetary policy outlook. Meanwhile, the Pound is trading on a weaker footing against its major counterparts this morning.
In yesterday’s trading session, Sterling traded above the 1.63 mark against the US Dollar. However, disappointing US existing home sales data suggested that housing market in the world’s largest economy continues to remain weak.
US Dollar – US Markets
The US Dollar is trading mixed against the majors this morning. Today’s Markit report is expected to show an improvement in the preliminary US manufacturing PMI reading for September. With the crucial labour market figures for August displaying a marked drop in hiring activity, an improvement in the pace of manufacturing activity might pacify investors that the nation’s economic growth has not lost traction for the third quarter. Additionally, markets will await today’s speeches from few US Fed officials to verify if the debate among policymakers about the timing of an interest rate hike has intensified. Meanwhile, the greenback is trading close to its intra-day lows against high yield currencies and the Euro following an unexpected improvement in China’s manufacturing PMI along with upbeat services PMI reading from Germany.
Data released yesterday showed that US existing home sales dropped for the first time in last four months for August. Although this did not signal renewed signs of weakness in the nation’s housing market, it has slightly dampened optimism that was created by recent data showing an improvement in domestic consumption.
Euro – European Markets
Data released earlier today indicated that the manufacturing and services PMI readings across key European nations were mixed for September. Services sector activity in France unexpectedly contracted while manufacturing sector remained in the contraction phase for the fourth straight month. The Euro nudged higher after data showed an unexpected improvement in German services PMI. However, growth in the German manufacturing sector slowed for September. Tomorrow’s German Ifo survey might generate considerable attention, as it would help ascertain sentiment among businesses. The Euro is trading higher against the Pound following the release of the latest PMI figures.
The Euro dropped against the majors yesterday after the ECB Chief indicated that the central bank stands ready to take additional stimulus measures, if needed, to spur inflation and growth in the Euro zone. Although the ECB is not anticipated to act immediately, a lower than expected offtake from the first TLTRO auction has strengthened prospects of the central bank further revamping its proposed asset purchase plan.
Other Currencies – Highlights
The Canadian Dollar is trading in a tight range against the greenback this morning. Market participants will keep a tab on today’s retail sales numbers in Canada which is expected to show a slower pace of growth for July. However, these numbers are unlikely to spark any movement in the Canadian Dollar, especially after the latest consumer price inflation report indicated that price pressures in the Canadian economy for August. Additionally, the Canadian Dollar is expected to remain supported against the majors, as data showed an unexpected improvement in China’s manufacturing activity.
Meanwhile, the Canadian Dollar continued to lose ground against the greenback yesterday after the Bank of Canada Governor, Stephen Poloz, indicated over the weekend that the recent acceleration in inflation was due to some seasonal factors and there is a considerable slack in the economy due to which the key interest rate should remain low for a considerable period. The dovish comments lifted the US Dollar-Canadian Dollar pair above the 1.10 mark.