UK Grabs Spotlight Today
The British government just released a deluge of data points. UK’s industrial and manufacturing production registered an improvement in June. On the other hand, the nation’s goods trade deficit widened in June. Further ahead in the session, Britain’s National Institute of Economic and Social Research (NIESR) will release its latest GDP estimate for the three months ending in July. This indicator usually helps predict the nation’s official GDP report, which is released on a quarterly basis.
In the Eurozone, German trade surplus slightly narrowed in June. Across the Atlantic, there are a set of second-tier data points due today. This includes the US wholesale inventories, NFIB business optimism and the IBD/TIPP economic optimism index data.
Pound Sterling – UK Markets
The Pound has extended its previous session losses against the greenback this morning and is attempting to regain the 1.30 handle. Sterling continues to remain under pressure after the Bank of England policy maker, Ian McCafferty, suggested further rate cuts and expansion of the central bank’s quantitative easing programme, in case the UK’s economic downturn worsens. The just-out data showed that Britain’s industrial production rebounded and manufacturing production posted an improvement in June. In contrast, the nation’s goods trade deficit widened during the same month. Going ahead, investors will look forward to UK’s NIESR GDP estimate for the three months through July. The indicator had improved to 0.6% in June, its highest gain this year.
Yesterday, Britain’s BRC retail sales monitor surprisingly bounced back in July to its highest level since January 2016, as British consumers shrugged off Brexit blues. However, there is more to this than meets the eye. The rebound in sales was helped by discounts and warm weather. Also, tourists took advantage of the weaker Pound and splurged on jewellery and watches.
US Dollar – US Markets
The greenback is trading mixed against the common currency and the Pound this morning. Last week’s stronger than expected US jobs report for July reinvigorated confidence that the US Federal Reserve (Fed) could raise interest rates later this year. Also, the data helped offset concerns about the US growth outlook, after a preliminary print of the nation’s second quarter GDP came in far less than expected. Moving ahead, market participants await clues on the Fed's intentions at their September and December monetary policy meetings. With the US economy still trapped in a prolonged period of subdued growth, it is expected that the central bank would remain cautious and could adopt a gradual approach to tighten its monetary policy in subsequent meetings. Today, investors look forward to the US wholesale inventories, NFIB business optimism and the IBD/TIPP economic optimism index data.
Yesterday, data showed that US labour market conditions index improved in July, returning to positive territory from a six-month slump. The index has not logged a positive reading since December 2015.
Euro – European Markets
The shared currency is trading higher against the greenback and the Pound this morning. Data released earlier during the session showed that Germany’s seasonally adjusted trade surplus slightly narrowed in June as growth in imports outpaced that of exports. On the other hand, the nation’s current account surplus widened above expectations in June. Separately, the French budget deficit narrowed in June. Next of relevance to the Euro region will be the flash second quarter GDP estimate for the Eurozone and Germany, which is scheduled for release later this week. Adding to this, German consumer price index and the Eurozone’s industrial production data will also attract a significant amount of market attention.
Yesterday, the Euro ended higher against its major peers, after the Eurozone’s Sentix investor confidence index surpassed investor expectations in August. Moreover, German industrial production returned to growth in June after registering a surprise contraction in May.
Other Currencies – Highlights
The Swiss Franc has extended its previous session losses against the US Dollar this morning. Data released earlier in the session showed that Switzerland’s unemployment rate remained unchanged at 3.3% in July, in line with investor expectations. Looking ahead, as there are no other significant economic data points lined up for release in Switzerland this week, market participants look forward to the nation’s producer and import prices data for July, along with the ZEW expectations index for August, due next week.
In other economic news, Switzerland’s Federal Statistical Office reported that the nation’s consumer prices declined in July, its first fall in six months. However, on an annual basis, the consumer price index improved to a 20-month high level in July. The annual rate has stabilised over the past few months and there is scope for a return to just above the zero level before the end of 2016. In July, prices of hotel stays, energy products, clothing and air travel declined, while that of holiday packages rose.