US Economic Data and Speeches Eyed
The week has begun on a quiet note for economic releases globally, however US economic reports scheduled later in the day will be closely eyed to gauge the pace of growth momentum in the nation during the third quarter of this year. In wake of the recent steady stance by the FOMC and upcoming US nonfarm payrolls later this week, market participants will keenly eye speeches by some of the Fed policy setters later today, for further cues on the timing of the Fed’s rate rise.
Meanwhile, traders in the Pound will track economic data in the coming days to gauge prospects of higher interest rates early next year.
Pound Sterling – UK Markets
The Pound – US Dollar currency pair has edged above the 1.52 mark this morning amid a quiet start to the week on the macroeconomic reporting front. Market sentiment for a rate rise by the Bank of England has somewhat subdued, in the wake of recent UK consumer price inflation report which showed a flat reading and also after the US Federal Reserve left its monetary policy unchanged at this month’s meeting. Going forward, speculations of a potential lift-off by the BoE during the first half of next year could further gain momentum if economic reports in the UK which are scheduled this week come in better than expected. Meanwhile, market focus is currently on future direction of interest rates in the US for the time being.
On Wednesday, the final second quarter GDP estimate for the UK economy will attract significant market attention with growth expected to be confirmed at 0.7%, substantially better than GDP figures reported for the first three months of this year. Later in the week, investors will eye manufacturing and construction PMIs, with little change anticipated in activity for September.
US Dollar – US Markets
The US Dollar recorded sharp gains against its major currency counterparts last week, buoyed by hawkish comments from the US Fed Chairwoman, Janet Yellen which signaled at a possible rate rise later this year. She also added that the recent turmoil in global financial markets were unlikely to deter the nation’s path to economic recovery. Also, a stronger than expected second quarter US GDP print released in the final session of the previous week added to the greenback’s momentum.
The greenback appears to have lost some momentum against its key peers at the start of this week. Ahead in the day, several US economic reports will be closely monitored to assess the economic outlook for the third quarter along with some of Fed’s policymakers’ speeches scheduled later in the session. On the macro front, first up is data on personal income and spending which will be followed by updates on pending home sales and the Dallas Fed manufacturing index. An uptick in personal spending numbers coupled with an increase in the core personal consumption expenditure could add to the US Dollar’s strength.
Euro – European Markets
This morning, the Euro is trading in a close range against the US Dollar, with the leading currency pair trading close to the 1.12 mark today. Meanwhile, the Euro – Pound currency pair has surrendered part of its gains amid lack of significant economic releases in either of the major economies today that could trigger volatility in the pair. Data releases in the US are again likely to dominate the trading session today, with personal consumption expenditure figures in the US and speeches by key Fed policymakers taking centre stage.
Economic data released earlier in the day indicated that Italy’s business confidence surged above estimates for this month and consumer morale was unexpectedly higher for September. However, the upbeat economic releases had little impact on trading in the shared currency against its major peers. In the coming days, German and Euro zone unemployment and preliminary consumer price inflation reports for the current month will attract notable market attention.
Other Currencies – Highlights
The New Zealand Dollar had surged higher against the US Dollar earlier today in response to Reserve Bank of New Zealand Governor, Graeme Wheeler's optimistic tone on the nation’s economic recovery in the Annual Report for 2014-2015 published in early Asian trading. The RBNZ Governor revealed that the New Zealand economy has fared better than many advanced economies in recent years, helped by the nation’s monetary policy framework. He also notified that the nation continues to be subjected to major challenges in the global environment and international forces have maintained a major influence on the economy. In the previous week, the Kiwi Dollar received fresh impetus against the greenback after the diary major, Fonterra, raised its milk-price forecast after the company reported a large increase in profits.
In the coming days, New Zealand’s business confidence numbers will be closely monitored along with key US macroeconomic releases and China’s manufacturing PMI data for further cues.