US Existing Home Sales Data Revealed Today
The global economy will witness the release of some significant data points today. To begin with, the just out UK’s BBA mortgage approvals dropped to their lowest level in eighteen months in July. Prior to this, data confirmed that the German economy slowed during the second quarter of this year as business investment continues to remain sluggish.
Across the Atlantic, the US weekly mortgage applications, along with the nation’s housing price index and existing home sales data for June, are up for release today. And in addition, market participants are all geared up to monitor developments from the major risk event this week, i.e. the Jackson Hole Symposium which commences tomorrow.
Pound Sterling – UK Markets
The Pound has extended its previous session gains against its major peers this morning. The just released data showed that the UK’s BBA mortgage approvals declined more than expected in July, registering its weakest reading since January 2015. This data suggests that the nation’s property market has been adversely affected by the Brexit vote.
Yesterday, Sterling’s rally continued for a second day against the US Dollar and the shared currency. The Confederation of British Industry’s (CBI) industrial trends for orders fell less than expected in August, thus providing some support for near-term confidence in the economy. The CBI industrial trends orders data is an indicator of business conditions which measures economic expectations of the manufacturing executives in Britain. While the data would normally be considered as second-tier in nature, this month's release was closely watched by market participants as they were very keen to find out how the UK economy has responded to the surprise Brexit vote. Further, the CBI selling price index advanced in August to register its highest figure since February 2015.
US Dollar – US Markets
The greenback is trading mixed against the common currency and the Pound this morning. Yesterday, data showed that activity in the US manufacturing sector deteriorated more than expected in August, suggesting that manufacturers have turned more cautious about the US economic outlook. Additionally, subdued domestic conditions and uncertainty surrounding the presidential election hit new order growth during the month. However, considering July and August figures together mitigates concerns as the manufacturing sector is showing its best performance so far this year in the third quarter. Meanwhile, the Richmond manufacturing index slipped back into contraction in August, as order backlogs and capacity utilisation declined during the period. On the contrary, US new homes sales surged more than expected in July to their highest level since October 2007, as low mortgage rates coupled with an improving labour market are helping support the US housing market.
Later today, investors will look at the newly-released US existing home sales and housing price index data.
Euro – European Markets
The shared currency is trading lower against the US Dollar and the Pound this morning. Data released earlier in the session showed that the final reading of Germany’s second quarter GDP grew in line with market expectations, powered by a strong export performance and a rise in government spending. However, second quarter growth in the Eurozone’s largest economy slowed compared to its impressive first quarter performance, as lack of new business investment emerges as the Achilles’ heel for the German economy.
Yesterday, the Euro ended lower against its major peers as a drop in German economic activity weighed on the shared currency. The German services sector slowed considerably in August, thus pulling down the nation’s composite PMI. Additionally, a preliminary reading of the Eurozone’s consumer confidence index declined further in August, dropping for the third consecutive month and registering its weakest reading since April 2016.
Other Currencies – Highlights
The Kiwi Dollar has extended its previous session gains against the greenback this morning. Data released earlier in the session showed that New Zealand recorded a trade deficit in July, as the nation’s exports of poultry products to the US and the European Union dropped during the period. In the absence of other economic indicators scheduled for release in New Zealand this week, investors will look forward to the nation’s building permits and the global dairy trade price index, due next week.
Earlier in the session, the Kiwi Dollar rallied to a three-week high level against the US Dollar after the Reserve Bank of New Zealand (RBNZ) Governor, Graeme Wheeler, indicated that the central bank is in no hurry to slash the key interest rate. He added that such action would result in unsustainable growth and would further inflame New Zealand’s property market. The RBNZ is trying to get weak inflation back into its 1.0-3.0% target rate without overheating the economy. However, the central bank governor also stated that the RBNZ is not advocating inaction and will stand ready to modify the monetary policy if needed.