UK Public Sector Net Borrowing Rises
The report just out has revealed that public sector net borrowing in the UK increased for August, surpassing market estimates. Moving ahead, market participants will eye the Confederation of British Industry’s report for September to gauge confidence among domestic producers, particularly amid signs of weak inflation in the UK.
In the Eurozone, the European Commission’s preliminary reading on domestic consumer morale for September will be eyed which has remained in negative territory for the past few months. Across the Atlantic, a speech by the US Fed Official, Dennis Lockhart, is likely to hog the limelight, especially after the central bank kept interest rates unchanged in its most recent policy meeting.
Pound Sterling – UK Markets
Data just out has shown that public sector net borrowing in the UK rose more than expected for August, despite domestic tax receipts witnessing an upside on the back of falling unemployment levels. This was in contrast to last month’s numbers, which showed that the government incurred a surplus in the previous month. Following the release of today’s data, the Pound has shown little reaction against the US Dollar and the Euro. Later today, the Confederation of British Industry survey will be eyed which is expected to show that morale among UK manufacturers improved for September.
In the latter half of today’s trading session, investors in the Pound-US Dollar pair will keep a tab on a speech by the US Fed Official, Fed Lockhart, for further insights into the timing of a rate rise in the US. Moving ahead, with a quiet week in terms of macro-economic releases in the UK, Sterling investors will keep an eye on global cues for further direction.
US Dollar – US Markets
In yesterday’s trading session, the US Dollar reversed its early session’s losses and gained momentum against the major currencies, after Atlanta Fed President Dennis Lockhart hinted that the US central bank would be able to raise interest rates in 2015, despite the recent volatility in global markets and the surprise depreciation in the Chinese Yuan. He further supported the Fed’s recent decision of not lifting its interest rates and stated that it was “prudent risk management" on the part of the central bank. He also highlighted that the world’s largest economy was "performing solidly" and the country had met the conditions for "further improvement in the labour markets." Meanwhile, data released yesterday showed that sales of previously owned homes for August tumbled more-than-expected, registering its first decline in four months.
In today’s trading session, the greenback is trading mixed against its major peers, with the Japanese Yen registering sharp gains. Investors would pay attention to Dennis Lockhart who is set to speak again today. However, following his comments yesterday, it seems unlikely that his comments would provide any fresh perspective.
Euro – European Markets
The Euro has started today’s trading session on a weaker footing against the US Dollar. With a relatively light global economic calendar today, investors would closely follow Eurozone consumer confidence data scheduled for release later today which is expected to show a marginal deterioration for September.
In yesterday’s trading session, the Euro lost ground against the US Dollar and slipped below the 1.12 mark after the ECB Chief economist, Peter Praet, revealed the central bank’s willingness to expand its bond-buying program if inflation and growth mandates were at risk. Additionally, the Euro came under further pressure after the ECB Governing Council member Ewald Nowotny stated that interest rates in the common currency bloc would remain low as long as growth continued to remain weak. He further added that the ECB at present has no specific target for the level of the Euro. Meanwhile, the Bundesbank, in its monthly report, indicated that Eurozone’s largest economy would continue with its growth path in the second half of the year amid increasing domestic consumption and rising exports.
Other Currencies – Highlights
In today’s trading session, the Australian Dollar has given up its initial sharp gains against the USD and is trading lower against the greenback. Data released earlier today revealed that residential property prices in Australia climbed above expectations for the second quarter. Policymakers in the past have been concerned about the continuous rise in home prices in Australia, as a sudden reversal in prices could hamper the already fragile consumer sentiment. Worries are being expressed that the housing cycle in Australia may be peaking raising, concerns about increased risks of a recession in the nation.
The Aussie Dollar lost ground against the US Dollar in yesterday’s trading session after MNI China Business Indicator revealed that business sentiment for September deteriorated in China, while the measure of the forward-looking outlook tumbled to its lowest level since 2007, fueling speculation about a possible rate cut by the RBA.