US Fed July meeting minutes in the limelight
The US will command maximum attention today as the US Federal Reserve’s (Fed) July monetary policy meeting minutes are scheduled for release. These minutes will throw light on the central bank’s monetary policy outlook for the rest of this year and in turn help investors to determine near term direction for the US Dollar. In addition to this, the US weekly mortgage applications data and a speech by the St. Louis Fed President James Bullard are also on tab.
In the UK, the latest set of jobs data saw the light today. While the nation’s unemployment rate held steady and average earnings rose for the three months ended June, the claimant count for July unexpectedly declined. Meanwhile, the Eurozone’s economic calendar paints a deserted look today.
Pound Sterling – UK Markets
The Pound has reversed its course and is trading lower against the greenback this morning, as the US Dollar attempts a minor recovery after yesterday’s slump. The just out data showed that UK’s unemployment rate held steady at 4.9% during the three months to June, and the nation’s average earnings picked up during the same period. Further, the number of people claiming jobseeker’s allowance unexpectedly dropped in July after displaying a wobbly pattern during the past few months - given the current gloomy conditions post Brexit, it is surprising to see that Britain’s claimant count has registered a drop in July after four consecutive months of increase.
Yesterday, UK’s consumer price index (CPI) data for July provided the much needed respite to Sterling. While the nation’s annual CPI came in above estimates, the core CPI matched investor expectations. This helped the Pound recover from the previous day’s five-week low level against the US Dollar and breach the crucial 1.30 mark, its strongest level since 10th August.
US Dollar – US Markets
The US Dollar is trading higher against the shared currency and the Pound this morning. Later today, investors look forward to the release of minutes from the Fed’s monetary policy meeting in July, as it could shed light on the outlook for US interest rate increases.
Yesterday, data showed that US consumer price index (CPI) registered a flat reading in July, mainly due to falling gasoline and grocery prices, while core measure of consumer price inflation also slipped in the same month, thus giving the Fed more leeway to keep interest rates low for a longer period. Meanwhile, industrial production in the nation jumped more than the market forecast, suggesting that the manufacturing sector is showing signs of improvement. Additionally, US housing starts rose to a five-month high, while building permits fell in July. Separately, the President of the Atlanta Fed, Dennis Lockhart, remained upbeat about the US economic growth and lent his support for at least one interest rate increase before the end of 2016.
Euro – European Markets
The shared currency is trading mixed against the US Dollar and the Pound this morning. Today, the Eurozone economic calendar is devoid of any data releases. However, market participants will brace themselves for a set of crucial data points due tomorrow. This includes the Eurozone’s CPI and construction output data, along with the European Central Bank’s latest monetary policy meeting minutes.
Yesterday, data showed that the German ZEW economic sentiment index bounced back into positive territory in August following July’s sharp deterioration to a four-year low level. However, the gauge fell shy of investor expectations. Further, the current situation sub indicator blew past estimates in August, and the economic sentiment index for the Eurozone surprisingly rose in August. Overall, the ZEW survey indicated that, although the Eurozone is recovering well from the recent harsh developments, the region still faces political headwinds both from within and outside the Eurozone and that fears persist about the resilience of the European Union banking sector. Separately, the Eurozone trade surplus unexpectedly narrowed in June.
Other Currencies – Highlights
The Kiwi Dollar has reversed its previous session gains and is trading lower against the US Dollar this morning. Earlier in the session the Kiwi Dollar had climbed against the greenback after the US CPI registered a flat reading in July and whole milk powder prices jumped to a ten-month high level in the week ended 16th August. At the latest Global Dairy Trade auction, world dairy prices rallied, adding to the view that milk prices may be on the road to recovery. This is a boost to New Zealand’s economic outlook as it is the world’s largest dairy exporter.
Additionally, New Zealand’s employment growth accelerated in the second quarter after changes to data collection, and the nation’s jobless rate fell. For the latest survey, Statistics New Zealand included defence force personnel and also reviewed the employment status, which resulted in some people previously counted as self-employed now being included in the labour force. Further, the nation’s producer prices advanced in the second quarter due to higher fuel and electricity prices.