US Retail Sales and Jobless Claims Data on Tap
Well….it happened! The RICS house prices data released earlier this morning revealed that residential property prices in the UK climbed higher than market estimates for July, as supply of homes fell to a new record low during the period. The renewed acceleration in house price inflation combined with the worsening shortage of properties is likely to fuel concern about the health of the nation’s housing market, don't expect a remedy anytime soon.
Across the Atlantic, retail sales will be in focus as investors try to gauge any improvement in consumer spending behaviour for July. Also, the latest update on US jobless claims will attract some market attention. In Europe, the final CPI print confirmed that inflation eased for July led by a renewed decline in energy prices. Expect the familiar theme of oversupply and shaky demand in the oil markets to leave future Oil price’s as any ones guess!
Pound Sterling – UK Markets
Another familiar theme was confirmed by a survey from the Royal Institution of Chartered Surveyors released earlier in the day which revealed that house prices in the UK rose last month at the fastest pace since July 2014, as the number of properties coming into the market failed to keep up with the demand. I’ll try to contain my surprise! Additionally, the RICS data cautioned that the imbalance between supply and demand in the UK residential market would lead to even stronger price gains in the coming twelve months. The survey data however had limited impact on trading in the Pound. This morning, Sterling has partly recovered some of its losses against the Euro, while it is trading in a narrow range against the US Dollar.
Yesterday, the Pound traded lower against the shared currency following the release of UK labour market data. Though, the report was mostly in line with market consensus, the weaker than expected headline wage earnings for the three month period until June weighed on Sterling. The Pound – US Dollar currency pair pulled back and surrendered some of its recent gains, improved data on US jobless claims could see that surrender short lived.
US Dollar – US Markets
To absolutely no ones surprise, the US Dollar traded on a weaker footing against its major currency counterparts yesterday as the devaluation of the Yuan by the Chinese central bank created turmoil in the global currency market. However, sentiment towards the greenback has somewhat recovered and it is currently trading higher against the Euro this morning following People Bank of China’s intervention to halt the slide in the value of the Chinese currency, so any predictions of a full out currency war will have to be put on hold….for now!
Looking ahead, the US retail sales print and latest jobless claims data, scheduled later in the day, will be particularly eyed by investors for further direction in the US Dollar against the major currencies. Markets anticipate that today’s release will show no change in first time unemployment claims from the previous weekly update, thus strengthening the outlook for the US labour market. Separately, growth in core retail sales is forecasted to have rebounded for June as the nonfarm payrolls released last week indicated an uptick in wage growth, so overall a skeptical optimism prevails!
Euro – European Markets
The common currency has trimmed its previous session gains and is trading lower against its key peers this morning. In economic news, the final reading of German CPI data that came in earlier today confirmed that inflation remained subdued for July, signalling that ECB’s aggressive asset purchase programme is yet to have the desired effect in the Euro zone’s largest economy. Additionally, CPI data in France and Spain showed an absence of price pressure in both the economies for the last month. Inflation across the Euro zone nations had ticked up following the launch of the ECB’s quantitative easing programme in March, however, since June, a renewed slide in oil prices has put downward pressure on CPI. The Euro has extended its losses against the majors’ post the economic releases.
In Greece, the Greek Prime Minister Alexis Tsipras hopes to secure a parliamentary approval today for the third bailout agreement that was reached early this week with its creditors, before the deal is put up for vote. Meanwhile, Athens has to make a critical debt repayment to the ECB by next week.
Other Currencies – Highlights
The New Zealand Dollar has surrendered most of its early gains and is currently trading on a weaker footing against the US Dollar. Meanwhile, market volatility triggered by the People's Bank of China move to devalue the yuan has begun to recede and the greenback has broadly recovered against the Kiwi Dollar amid renewed expectations of a near term rate rise in the US.
In New Zealand, house sales climbed to an unseasonably high volume for July, though house prices took a pause in the upward trend compared to June, as reported by the Real Estate Institute of New Zealand earlier today. While robust growth in home sales volume signals that New Zealand’s housing market remained strong for July, the data had very little impact on trading in the Kiwi Dollar. Meanwhile, markets now look forward to some notable US economic releases and second quarter retail sales data in New Zealand, due later today, for further direction.
That's your lot! Have a great day.