UK House Price Growth Slows in August
The Nationwide Building Society earlier today reported that UK house prices growth slowed more than market consensus for August, indicating that prices might be stabilizing at the current levels. The annual rate of price growth was the weakest since June 2013.
Across the Atlantic, investor focus will be on today’s revised US GDP data and the consensus estimate is that the US economy expanded at a faster pace in the second quarter than initially forecasted. Also of interest would be US jobless claims and pending homes sales data which are slated for release later today. In Europe, the final second quarter GDP figures confirmed that growth in the Spanish economy was the fastest in eight years.
Pound Sterling – UK Markets
The Nationwide earlier today reported that UK house prices rose at a slower than anticipated pace for August, despite a shortage of housing properties. The less than expected rise in prices and recent indications that the BoE could raise borrowing rate early next year are likely to lead to a jump in demand for properties among homebuyers in the coming months.
The Pound extended the drop below the 1.56 mark against the US Dollar yesterday. Meanwhile, UK economic data released yesterday showed that new home loan approvals rose to a multi month high in July and retail sales growth accelerated in August, suggesting that UK economic growth for the second half of this year will be consumer driven. The recent turmoil in the Chinese equity market has fuelled concerns about growth and direction of the global economy, but consumers in the UK seem to be upbeat about Britain’s growth outlook. Also, the latest CBI distributive trades survey which hinted to a firm and steady growth in retail sales in August, is likely to have induced optimism for the upcoming data on UK retail sales for August.
US Dollar – US Markets
The US Dollar is trading lower against most of its major peers this morning, ahead of the second quarter’s revised US GDP reading scheduled for release today. The print is anticipated to show an upward revision in the nation’s second GDP estimate, amid stronger retail sales, home purchases and durables shipments, during the quarter. Separately, the annual Jackson Hole symposium is set to begin today, wherein statements from key central bank Chiefs will be eyed, especially considering the recent financial turmoil in China. However, in the absence of Janet Yellen at this event, market participants are unlikely to gain more clarity over the timing of a rate rise in the US.
Additionally, investors will eye the weekly jobless claims survey which is expected to show that the number of first time unemployment beneficiaries in the US eased for the previous week. If the number of claimants stay close to the estimated levels, it will add to a new round of optimism about the health of the US labour market ahead of next week’s August report on US nonfarm payrolls. Furthermore, a print on pending home sales for July will be closely eyed.
Euro – European Markets
Data released earlier today revealed that German import prices fell more than market estimates for July, amid a slump in global crude oil prices last month. Market participants will eye the preliminary reading of German consumer price inflation tomorrow to gauge the impact of a continued fall in energy prices on the nation’s price health recovery. Meanwhile, the INSEE’s report showed an improvement in France’s business climate and production outlook indicator for August. Additionally, Spain’s final GDP data came in line with the flash estimates for the second quarter. However, the economic releases have had little influence on trading in the Euro against the majors this morning.
Yesterday, the Euro lost ground against the US Dollar following upbeat durable goods orders data in the US. Separately, the ECB chief economist, Peter Praet, made cautionary remarks on inflation, amid concerns about the global economic outlook and a renewed slump in commodity prices, and added that the central bank was prepared to expand or extend its quantitative easing programme, if required.
Other Currencies – Highlights
The US Dollar – Swiss Franc currency pair is currently trading just above the 0.95 mark. Investors are waiting on the sidelines in anticipation of an upbeat tone from US economic releases later today which include the second quarter US GDP data, jobless claims and pending home sales data.
Meanwhile, economic data released earlier today showed that Swiss industrial production continued to slide in the second quarter, reflecting the sector’s struggle this year with a strong Swiss Franc. However, the decline in factory and manufacturing output was smaller than the fallout witnessed in the first three months of this year. The data had limited influence on trading in the Swiss Franc against the US Dollar. Going forward, investors focus will shift towards Switzerland’s second quarter GDP data, due tomorrow, with markets looking for confirmation that the Swiss economy has slipped into recession for the first time since 2009.