US core PCE data to grab eyeballs today
The data deluge continues into the second day of the new month. In Britain, the just released data showed that the nation’s struggling construction industry deteriorated further in July. Later in the day, the nation will witness another economic release in the form of the BRC shop price index.
In the Eurozone, investors await the region’s producer price index data for June. Earlier in the session, data indicated that number of people unemployed in Spain fell last month. Across the Atlantic, the US Federal Reserve’s (Fed) preferred inflation gauge, the core personal consumption expenditure (PCE), for June is up for release today. As US inflation has consistently dodged the central bank’s objective, a strong print can provide some renewed optimism. In addition to this, the US personal spending and ISM New York index along with a speech by the Dallas Fed President, Robert Kaplan, is scheduled today.
Pound Sterling – UK Markets
The Pound has regained its footing against the US Dollar this morning. The just out data showed that UK’s construction PMI dropped further into contractionary territory in July, after recording its first drop in over three years in June. Investors await Britain’s BRC shop price index data for July, scheduled to release later today.
The Sterling came under pressure against its major peers at the start of the new month after the first set of hard data for August reinforced the Bank of England policymakers’ conviction to introduce an interest rate cut when they meet later this week, so as to cushion the economic impact of Brexit. Yesterday, data showed that Britain’s Markit manufacturing survey headline figure for July missed market estimates, dropping to its lowest level since February 2013 as the nation’s production levels and incoming new orders fell due to increased business uncertainty following the UK’s vote to leave the European Union.
US Dollar – US Markets
The US Dollar is trading on a weaker footing against the Euro and the Pound this morning, after yesterday’s data showed that the US ISM manufacturing PMI fell short of market expectations in July. Growth decelerated in the nation’s manufacturing sector in July from June, reflecting sluggishness in the US economy that was clearly visible from the second quarter GDP figures. On the other hand, the final print of the US Markit manufacturing PMI ticked up to a nine-month high in July buoyed by solid growth of incoming new work. This encouraging data points towards the beginning of a stronger upturn at the start of the third quarter after a disappointing first half of the year.
Later today the US economic calendar is scheduled to offer personal consumption expenditure, personal income and spending data for June. However, the data will probably not cause any major currency movement. Additionally, market participants brace themselves for the monthly nonfarm payrolls report for July scheduled later this week, as the Fed closely assesses this data to decide its future course of action.
Euro – European Markets
The shared currency is trading mixed against the US Dollar and the Pound this morning. Earlier in the session, data showed that the number of people unemployed in Spain fell more than expected last month. Market participants await the release of the Eurozone’s producer price index (PPI) data for June, due in a few hours. Looking further ahead this week, several important macroeconomic economic data points are scheduled for release, including the Eurozone’s retail sales and services PMI, along with German factory orders and the European Central Bank’s economic bulletin, which contains the bank’s updated views about the Eurozone’s inflation, employment and more.
Yesterday, the Euro lost ground against the greenback, reversing its Friday session gains. There were no surprises from key Eurozone manufacturing PMI’s as it came very close to the investor estimates. While the German and Eurozone manufacturing activity pointed towards slight expansion, the French reading continued to languish in contractionary territory.
Other Currencies – Highlights
The Australian Dollar briefly slipped against the greenback this morning after the Reserve Bank of Australia (RBA) slashed the key interest rate by 25 basis points to a record low level of 1.5%. However, the domestic currency later pared its losses. The decision by the central bank was widely expected following a recent run of weak inflation numbers. Australia’s annual inflation rose just 1.0% during the second quarter of this year, which is still below the RBA’s target of 2.0-3.0%. In a statement accompanying the monetary policy decision, RBA Governor Glenn Stevens justified the rate cut by stating that prospects for sustainable growth in the nation’s economy, with inflation returning to target over time, would be improved by easing monetary policy.
Domestic data released a few hours before the RBA monetary policy decision also seemed to support an interest rate cut. Australia’s building approvals dropped for the second consecutive month in June, pointing to an eventual slowdown in the nation’s housing sector. Additionally, the nation’s trade deficit almost doubled in June.