UK Mortgage Approvals Rise above Estimates
The just released BoE figures showed that the number of mortgage approvals increased higher than market consensus for June, indicating that housing activity has improved amid supportive economic factors, notably robust wage earnings growth, elevated consumer confidence levels and record low mortgage interest rates. Going forward, investors will eye GfK’s consumer confidence report, scheduled tomorrow for an early indication of consumer buying behaviour in the current month.
Across the Atlantic, the US Fed’s monetary policy meeting statement due later today will attract significant market attention for any explicit hints on the timing of an interest rate rise. In Europe, GfK’s forward looking indicator suggested that morale among German consumers steadied going into August.
Pound Sterling – UK Markets
Just released data showed that mortgage approvals in the UK rose higher than market estimates for June, signaling renewed homebuyers confidence amid record low borrowing rates. The BoE’s figures are in line with last week’s British Bankers Association approvals for unsecured consumer borrowing. With BoE Governor Mark Carney’s recent comments about a potential rate rise at the turn of the year, it is likely that more number of people would borrow in the coming months to benefit from the current low interest rates. Additionally, a report showed that consumer borrowing in the nation rose above market consensus for June. The economic releases had little impact on trading in the Pound as it continues to trade in a tight range against the US Dollar this morning. Moving ahead, consumer confidence data scheduled tomorrow and a CBI distributive trade survey due in a short while will shed light on consumers’ spending behaviour this month.
Sterling traded broadly higher against its major currency counterparts yesterday, bolstered by robust second quarter economic growth data.
US Dollar – US Markets
The greenback is looking for direction against the Pound this morning, with investors particularly focused on the US Federal Reserve’s policy statement later today for further cues on when the US central bank would raise its interest rate. With the central bank widely expected to retain its monetary policy at the conclusion of two days meeting today, the tone of tonight’s FOMC statement will have significant impact if the US Fed signals its intentions clearly on the timing of raising the benchmark interest rate. The meeting minutes will be published in three weeks and it could be a more helpful guidance to gauge the opinion of policymakers on the timing of the rate rise. Looking ahead, spotlight is going to turn towards preliminary US GDP data for the second quarter which is scheduled tomorrow for release.
Yesterday, the US Dollar pared some of its gains against the Euro after the Conference Board reported that consumer confidence unexpectedly deteriorated for July, falling to its lowest level since September amid concerns stemming from global events and a less optimistic economic growth outlook.
Euro – European Markets
The common currency is trading in a close range against the Pound this morning. Meanwhile, a consumer sentiment report released earlier today showed that morale among German consumers for August was unchanged from July. However, the GfK survey indicated that consumer expectation of the strength of economic growth has reduced despite improved optimism about their future income. Consumers are less willing to make purchases despite high employment and strong pay increases, as ongoing talks between Greece and European officials have dampened optimism about Germany’s economic growth outlook. In France, consumer sentiment index fell unexpectedly for July, as households were less optimistic about their recent financial situation.
In Athens, Greece began another round of negotiations with its international creditors with focus on changes to the Greek pension system, labour market, fiscal policy, and market regulation. Greece and the Euro zone officials have to come up with an agreement in the next two weeks, so that a bailout deal can be secured before the deadline to meet some of its debt obligations to the ECB.
Other Currencies – Highlights
The US Dollar – Japanese Yen currency pair has currently picked up momentum, shrugging off the upbeat Japanese retail sales figures that came in earlier today. The upcoming US Federal Reserve’s monetary policy statement following the completion of a two day meeting has heightened the appeal of the greenback. Investors would also keep a tab on pending home sales and MBA mortgage applications data in the US ahead of Fed’s interest rate decision and guidance on the future course of monetary policy in the nation.
Data released earlier this morning showed that retail sales in Japan rose in June, surpassing market expectations. However, the pace of retail sales growth slowed for the second consecutive month. The report comes days after the Japanese government downgraded its outlook for consumer prices primarily attributing the cause to renewed decline in oil prices. Going forward, investors will particularly eye Japan’s core household spending data scheduled later in the week for a better picture of private consumption in the last quarter.