UK consumer confidence recovers from referendum
UK house price growth has been hampered by a lack of construction activity; annualised growth slowed to 5.3% in September, from 5.6% in August. The latest consumer confidence data printed better than expected at -1, no worse than before the EU referendum.
There was some evidence of quarter-end Sterling selling and a deterioration in risk appetite also contributed to the Pound’s swift fall to 1.1560 from yesterday’s peak of near 1.1614 versus the Euro. Today’s UK current account data will be watched closely after the previous two quarters’ very poor results. If GDP data falls short of expectations it could generate more speculation of lower interest rates sooner rather than later.
A preliminary reading of German CPI data showed inflation rising to 0.7% for September from 0.4% in August. Any broader increase in Eurozone inflation could spark speculation that the European Central Bank (ECB) will not need to relax monetary policy further. The Euro again found support just below 1.1200 against the Dollar on Thursday and generally narrow ranges prevailed, although there were worries that wider volatility would spill over into the Euro.
There were fresh concerns surrounding Deutsche Bank late in the European session which briefly unsettled the Euro, although ranges were still relatively narrow and the currency continued to consolidate above the 1.1200 level against the Dollar.
The US Q2 Annualized GDP data impressed with a reading of 1.4%, up from 1.1%. The US market remains robust with a weekly jobless claims figure of 254k, up from 251k previously. A lower than expected trade deficit for August also triggered a modest upward revision of third quarter GDP estimates. Pending home sales data missed expectations with a 2.4% decline in August.
Philadelphia Fed President Harker stated that December would be the perfect time to raise rates. On the other hand, Atlanta President Lockhart stated that he backed September’s decision to leave rates on hold in order to see further progress in reaching the Fed objectives, although he expects rates to rise soon.
Data to watch: 9.30am UK Quarter 2 GDP (year on year & month on month). 10am EUR Flash CPI (year on year & month on month) & August Unemployment Rate. 1.30pm US August Personal Consumption Expenditures & Core PCE (year on year & month on month), PersonaL Spending. 2.45pm US Chicago PMI. 6pm US Baker Hughes Oil Rig Count.