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Interest turns to rates

Interest turns to rates

GBP
Mortgage approvals and consumer lending data both modestly beat consensus forecasts, suggesting solid consumer demand at the end of the second quarter. Consumer confidence dipped in July and the Lloyds business confidence indicator remained unchanged.

 

The Pound continued to be unsettled by headlines outlining political risks, as the government prepares for the possibility of a no-deal Brexit. Mark Carney steered clear of any hints ahead of tomorrow’s Bank of England policy meeting. The Euro pushed back through past the 1.1235 level, but a weaker US Dollar and gains in oil prices meant Sterling settled near 1.3130.

 

Markets are braced for choppy month-end Sterling trading during the day, especially with the Bank of England policy decision pending. The Pound opens this morning at 1.3130 against the Dollar and 1.1202 against the Euro.

 

EUR

 

Increased confidence with the services sector boosted what was a fairly flat day for the Euro yesterday. German CPI date came out slightly higher for July, but YoY inflation came out slightly below consensus at 2%, meaning trading for the day was pretty neutral.

 

The Euro did rally slightly against the Dollar yesterday reaching 1.1717. It seems to have halted the decline it experienced last week, but due to a long list of economic releases today in the region, volatility has been kept to a minimum.

 

The positive momentum kept its pace through the Asian session this morning but the release of Euro-zone consumer inflation figures and prelim Q2 GDP growth figures has put a halt to any aggressive bets being taken by traders. Today will be a very busy day in terms of data so we can expect a lot of keen eyes watching, which could mean volatility if any figures miss consensus.  

 

USD

 

US pending home sales data nudged up above expectations with a 0.9% increase in June. The Dollar failed to make headway against expectations of month-end technical selling and the Euro climbed above the 1.1700 level.

 

Some Dollar selling was triggered by the failure to break key technical levels against the Euro last week. US bond yields declined yesterday and the Euro held the 1.1700 level amid market caution in advance of this evening’s Federal Reserve decision.

 

Data to watch:

 

06:00    GER Retail Sales (MoM) (Jun)

06:45    FRA Consumer Price Index (EU norm) (YoY) (Jul)

08:00    GER Unemployment Rate s.a. (Jul)

08:00    GER Unemployment Change (Jul)

09:00    EUR Gross Domestic Product s.a. (QoQ) (Q2)

09:00    EUR Gross Domestic Product s.a. (YoY) (Q2)

09:00    EUR Unemployment Rate (Jun)

09:00    EUR Consumer Price Index (YoY) (Jul)

09:00    EUR Consumer Price Index (YoY) (Jun)

09:00    EUR Consumer Price Index – Core (YoY) (Jul)

12:30    USD Personal Spending (Jun)

12:30    USD Core Personal Consumption Expenditure – Price Index (YoY) (Jun)

12:30    USD Personal Consumption Expenditures – Price Index (MoM) (Jun)

12:30    USD Personal Consumption Expenditures – Price Index (YoY) (Jun)

12:30    USD Core Personal Consumption Expenditure – Price Index (MoM) (Jun)

12:30    USD Personal Income (MoM) (Jun)

13:00    USD S&P/Case-Shiller Home Price Indices (YoY) (May)

13:45    USD Chicago Purchasing Managers’ Index (Jul)

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