UK Home Loan Approvals Rise in June
The just released data showed that the number of approvals for new mortgages rose higher than market consensus for June, indicating strong demand for properties in Britain’s housing market. The figures indicate that the rise in home loan approvals is consistent with the trend seen since the start of the year. In the upcoming week, market focus will shift towards the much anticipated preliminary second quarter UK GDP reading.
In Europe, a flurry of flash PMI readings showed that growth in the manufacturing sector of the Euro zone and its two largest economies slowed as concerns surrounding the Greek debt crisis weighed on business confidence. Across the Atlantic, Markit manufacturing PMI and new home sales data are slated for release later today.
Pound Sterling – UK Markets
The Pound has failed to regain lost ground against the US Dollar this morning. Meanwhile, the just released publication by the British Bankers' Association indicated that the number of mortgage approvals in the UK edged higher than market expectations for June, reflecting a pickup in residential property demand and the possibility of stronger consumer spending later on. Looking ahead to next week’s economic releases, the spotlight will be on the second quarter GDP print and signs of stronger recovery are likely to raise the prospects of higher interest rates sooner than anticipated. In a noteworthy development, the minutes of the last monetary policy meeting released earlier this week showed that some BoE members adopted a more hawkish tone in light of recent indicators suggesting a brighter economic growth outlook.
The Pound – US Dollar currency pair dropped below the 1.56 mark yesterday, following the release of disappointing retail sales data in the UK. Sterling further extended losses against the greenback in the wake of upbeat economic releases from the world’s largest economy.
US Dollar – US Markets
The US Dollar is trading on a stronger footing against its major currency counterparts this morning. In the final trading session of the week, investors will keenly eye a preliminary gauge of manufacturing activity and new home sales data in the US scheduled for later in the day. The flash June manufacturing PMI index is expected to remain unchanged from the previous month’s reading, which was the weakest since October 2013. However, a surprise upside in the preliminary estimates could reignite hopes that the US Fed is likely to implement a change in its policy stance sooner than expected. Next on tap for investors will be the new home sales numbers for June, with markets anticipating an upbeat tone, similar to the recently released housing market data. Going forward, the Federal Open Market Committee meeting next week will attract significant market attention.
In yet another sign of a strengthening US labour market, the number of applications for first time unemployment benefits fell to its lowest level in four decades for last week. The upbeat data helped the greenback recover some of its early losses against the Euro yesterday.
Euro – European Markets
Investors’ attention today was on a wave of manufacturing and services PMI data in the Euro zone and its two largest economies. The shared currency has surrendered most of its early morning gains against the US Dollar after the flash German and French manufacturing PMI softened for the current month. The PMI data showed that the French manufacturing sector fell back into the contraction territory for July, while a drop in exports dented manufacturing growth in Germany. Euro zone’s preliminary PMI showed that private sector growth cooled in July, suggesting that the nation’s economy has lost some momentum at the beginning of the third quarter.
The Euro – US Dollar currency pair had initially hovered close to the 1.10 mark early this morning, as fears of Greece leaving the Euro bloc receded after the cash strapped nation’s lawmakers took another step yesterday towards a third bailout deal, with the Greek Parliament approving a second set of harsher austerity measures.
Other Currencies – Highlights
The US Dollar - Japanese Yen currency pair briefly touched the 124.00 mark earlier today. However, the US Dollar surrendered those gains as traders preferred the Japanese Yen on the back of weak Chinese PMI data. Early morning data showed that manufacturing activity in Japan for July expanded at the fastest pace in five months, signalling stronger recovery in Japan’s economic growth after a slump in the second quarter. The preliminary data indicated that the number of new orders rose as firms turned more confident and increased capital investment. Market participants will now shift their focus to US manufacturing PMI and new home sales data due later today for further direction in the pair. In the upcoming week, Japan's retail trade and consumer prices data will attract significant market attention.
Yesterday, the IMF in its latest assessment of the Asian economy indicated that Japan was recovering moderately and projected that the economy would grow by 0.8% in 2015 and 1.2%in 2016.