UK Mortgage Approvals Decline
Today’s macro data in the UK has revealed that the number of mortgage approvals in the UK dropped for October due to tighter mortgage lending norms introduced by the BoE earlier this year. Meanwhile, the main focus among market participants is likely to remain on the BoE Governor’s testimony in parliament later today where he is anticipated to offer more clarity to the bank’s recently downgraded inflation forecasts.
Across the Atlantic, the revised GDP numbers for the third quarter are expected to show a downward revision. Meanwhile, the revised GDP data in Germany released earlier today confirmed that Europe’s largest economy dodged a recession for the third quarter.
Pound Sterling – UK Markets
Data just out has shown that the number of mortgage approvals in the UK declined more than expected for October. Considering that the BoE tightened its lending norms earlier this year to prevent Britain’s housing market from overheating, a continuous drop in the number of mortgage loans is likely to ease some concerns of the central bank. Going forward, the BoE Governor is scheduled to testify about the latest inflation report where he is expected to provide further insights into the central bank’s latest downbeat inflation forecasts. Market participants will look for signs related to the timing of an interest rate rise in the nation, particularly after the quarterly inflation report and the minutes of the BoE’s latest policy meeting offered divergent views. Additionally, speeches from other key officials are scheduled to follow the BoE Chief’s testimony and will attract considerable attention, especially after the recent BoE minutes revealed differing views among policymakers to risks surrounding the economic outlook.
Meanwhile, the Pound is trading in a tight range against the majors this morning. Tomorrow’s revised GDP data in the UK will be keenly eyed.
US Dollar – US Markets
The US Dollar is trading in a tight range against the majors this morning ahead of today’s revised GDP reading in the US. Data is anticipated to show that the pace of economic growth was downwardly revised for the third quarter, as construction sector activity and export growth remained subdued. However, the downward slide is expected to be partly offset by an upward revision to domestic spending. Separately, another report scheduled later today is expected to reveal that confidence among consumers in the US improved for November, as domestic spending remained supported by pre-festive shopping in the nation.
The greenback lost ground against the Euro yesterday following the release of an upbeat German Ifo survey. In the US, the Markit preliminary non-manufacturing PMI report for November showed that the pace of services sector activity slowed for a fifth consecutive month to reach its lowest level since May 2014. The slowdown was mainly led by weak investment growth across the services sector amid an uncertain global macro environment. However, the report revealed that the hiring pace across firms in the US services industry remained well supported.
Euro – European Markets
The revised GDP data in Germany released earlier today confirmed that the nation dodged a recession during the third quarter. However, with economic recovery in Europe’s largest economy remaining sluggish, market participants will eye macro data going forward for signs of improvement in the nation’s economy. Later in the week, traders will eye the preliminary consumer price inflation data in Germany which could possibly show an easing trend for November. Amid persistent threat of deflation in the common currency bloc, investors will keep a tab on speeches by various ECB officials this week to determine the possibility of further monetary stimulus measures in the Euro zone.
In yesterday’s trading session, the common currency gained ground against the greenback following the release of an upbeat Ifo survey in Germany for November. Data revealed that sentiment among domestic manufacturers and wholesalers improved, especially after the nation avoided a recession for the third quarter. Furthermore, the survey hinted that firms were optimistic about business conditions in Germany going forward.
Other Currencies – Highlights
The Japanese Yen gained ground against the greenback after the Bank of Japan Governor, Haruhiko Kuroda, indicated earlier today that the central bank will continue to act in order to ensure that the nation’s inflation reaches its 2% target next year. This cleared doubts among market participants, especially after differing views among policymakers over the recently announced stimulus measures in Japan heightened prospects that the central bank might have its hands tied in taking more easing measures. Meanwhile, the minutes of the latest BoJ policy meeting released earlier today revealed that four out of nine policymakers had opposed the proposal to further increase quantitative easing.
Later today, the Yen is expected to take direction from today’s revised GDP and consumer confidence numbers in the US. Going forward, Japanese consumer price inflation and labour data scheduled later this week will prove crucial for further direction to the Japanese Yen against the majors.