Qatar boosts Lira’s hopes
UK consumer prices were unchanged for July, but the effect it had on markets seemed to be accounted for, the news was priced into the market and there was virtually no movement. If anything, the market was underwhelmed and the Pound slipped against the Euro and the Dollar. CPI figures rose from 2.4% to 2.5%, whilst the Pound to Euro rate hovered at 1.1222, and the Pound to Dollar rate fell to 1.2713.
Brexit talks are set to resume in Brussels today, although this is only expected to have an effect on equity markets. Having said this, any indication that comes as to a deal or no-deal scenario seems to spill over into the currency market, and usually means the Sterling suffering.
Data today includes UK retail sales, which are expected to rise, and retail sales excluding fuel. Both are expected to generate some volatility. The Turkish Lira-shaped cloud is still hanging over the Sterling, but there was some recovery yesterday. Late in Wednesday’s session, there was a slight recovery ahead of the UK data, and demand for the Dollar rescinded.
Retail sales rose in the US yesterday by 0.5%, up from a consensus of 0.2%, and core sales increased, which meant confidence in the Dollar continued. China also announced it had been invited to trade talks with the US at the end of August, which only supported the confidence in the Dollar.
The New York Empire manufacturing survey strengthened to 25.6 for August, boosting confidence, but markets were slightly reserved due to expected comments by Fed officials and by President Trump, neither of which materialised.
Today’s data includes housing stats and building permits, which are due at 13:30. Market feeling is that they will both be above previous figures. The Philadelphia Fed releases its manufacturing survey, as well as the Department of Labor releasing its weekly jobless claims report. Again, both are expected to rise.
Yesterday was still very much a day of risky conditions and not much volatility. The Euro fell to a 13-month low, just above the 1.1300 mark against the Dollar. Qatar announced it was investing $15 bn into Turkey, providing support for the Lira and therefore stabilising the Eurozone and calming its nerves. There is still concern over the banking sector and the Dollar is still being seen as a safe haven.
Yesterday was also a very quiet for economic data, and today is much of the same. There will be Trade Balance figures, Spanish 3- and 5 -year bond auctions, and German wholesale price index figures out this morning – none of which are expected to generate volatility. Tomorrow is a much more interesting day, with EU Consumer Price Index figures coming out.
Data to watch
02:30 AUD Participation Rate (Jul)
02:30 AUD Unemployment Rate s.a. (Jul)
02:30 AUD Employment Change s.a. (Jul)
09:30 GBP Retail Sales ex-Fuel (YoY) (Jul)
09:30 GBP Retail Sales ex-Fuel (MoM) (Jul)
09:30 GBP Retail Sales (MoM) (Jul)
09:30 GBP Retail Sales (YoY) (Jul)
10:00 EUR Trade Balance n.s.a. (Jun)
10:00 EUR Trade Balance s.a. (Jun)
13:30 USD Housing Starts (MoM) (Jul)
13:30 USD Building Permits (MoM) (Jul)
13:30 USD Continuing Jobless Claims (Jul 30)
13:30 USD Initial Jobless Claims (Aug 6)
13:30 USD Philadelphia Fed Manufacturing Survey (Aug)