US Weekly Jobless Claims Eyed
Today, the UK economic calendar remains absolutely data-quiet, and therefore market participants will divert their attention towards the Eurozone and the US.
In the Eurozone, French consumer prices declined in July, bogged down mainly by a drop in the prices of manufactured goods. Meanwhile, Italian consumer prices advanced as expected in July. Across the Atlantic, the US weekly jobless claims, along with the nation’s import and export price index data, will take centre stage today.
Pound Sterling – UK Markets
The Pound is trading weaker against the US Dollar and the shared currency this morning. Data released earlier in the session showed that UK’s RICS house price balance index recorded its lowest reading since April 2013 in July, indicating that the nation’s housing market activity ebbed in the month following the Brexit vote. There are no other economic releases in Britain today.
Separately, the Bank of England's (BoE) quantitative easing (QE) programme hit a snag just two days after being re-launched. The BoE could not convince financial institutions to part with their gilts, signaling that low interest rates might have run their course. Further, the central bank stated that the £52.0 million shortfall from the first day of its QE operation will be incorporated in the asset purchases planned for the second half of its current six-month bond-buying programme. Meanwhile, the BoE’s August regional Agents’ survey, which was conducted between late June and late July, revealed that half of the companies surveyed would ease back on recruiting plans over the next year.
US Dollar – US Markets
The US Dollar is trading higher against its major peers this morning. Market participants will keep a close eye on the US weekly jobless claims as well as import and export price indices data, scheduled later today. Looking further ahead, investors wait to consider the latest US retail sales data, due tomorrow, to see whether July’s job gains have bolstered consumer spending in the nation. Additionally, the US consumer sentiment index is also awaited.
In the previous session, data showed that the number of new job openings in the US rose more than expected in June, compared to an upwardly revised reading in May. The data overall points towards an underlying strength in the US labour market. In other economic news, the US Federal Government recorded the biggest monthly budget deficit in the seventh month of the year since February. Meanwhile, US mortgage applications rebounded for the first time in four weeks as mortgage rates declined for the second straight week.
Euro – European Markets
The shared currency is trading mixed against the US Dollar and the Pound this morning. Data released earlier in the session showed that French consumer price index (CPI) dropped in July, mainly due to a fall in prices of manufactured goods. In addition to this, prices of clothing, shoes and oil also declined during the period. Separately, Italian consumer prices rose in line with market expectations in July. However, a harmonised measure of annual price changes, that is usually preferred by the European Central Bank (ECB), fell in July. Inflation in the Eurozone has long been running below the ECB’s 2.0% target, despite the central bank cutting interest rates to record lows and spending billions of Euros on asset purchases.
Looking ahead, the most important data point this week for the Eurozone will be revealed tomorrow. German consumer prices data for July, along with the preliminary print of second quarter GDP for the Eurozone, Germany and Italy, will be released. Moreover, investors await the Eurozone’s industrial production data for June.
Other Currencies – Highlights
The Kiwi Dollar surged to its highest level in more than a year against the US Dollar this morning after the Reserve Bank of New Zealand (RBNZ) slashed the benchmark interest rate by 25.0 basis points (bps) to a new record low of 2.00%. However, a few market participants were expecting the central bank to introduce a 50.0 bps cut in interest rate, and this is what caused the Kiwi Dollar to soar. The RBNZ Governor, Graeme Wheeler, had cited earlier that New Zealand’s inflaming housing market is one reason why the central bank has been reluctant to cut the official cash rate too far. Post the decision, the Governor stated that prospects for global growth and commodity prices remain uncertain and that the strength in the domestic exchange rate is making it difficult to achieve the 1.0-3.0% inflation target.
In other economic news, New Zealand’s food price index fell in July as weaker dairy prices weighed on the grocery segment. Moving ahead, investors await the nation’s business PMI and retail sales data, scheduled to release later today.