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UK Data
 

• Monday 9.30am PPI Input and Output for July previous 2.1%y/y and 2.4%y/y
• Tuesday 12.01am RICS Housing Survey for July previous 10.6 3m%bal
• Tuesday 9.30am CPI for July previous 2.4%y/y
• Wednesday 9.30am Average Earnings for June previous 3.5 3m avg.
• Wednesday 9.30am BoE release minutes from prior (2^nd Aug) meeting
• Thursday 9.30am Retail Sales for July previous 0.2%m/m

Last week saw further signs that the recent rate hikes from the BoE are impacting the UK consumer when retail sales figures from the BRC only rose 3.1%y/y in July, their lowest rise since November 2006. The trade balance also shrunk to its lowest deficit since October 2005 (£6.226bn) as oil imports receded. The main event however was the release of the Bank of England inflation report which confirmed that further tightening remains necessary if the CPI figure is to return to the 2.0% target rate. In light of this, attention this week returns to inflation data where the market will be looking to gauge the timing of the next rate hike.  

US Data

• Monday 1.30pm Retail Sales for July previous -0.9%m/m
• Tuesday 1.30pm Trade Balance for June previous -$60.0bn
• Tuesday 1.30pm PPI for July previous -0.2%m/m
• Wednesday 1.30pm CPI for July previous 0.2%m/m
• Wednesday 1.30pm EmpireState Survey for August previous 26.5
• Wednesday 2.00pm Treasury International Capital System (TICS) for July previous $126.1bn
• Thursday 5.30pm Philly Fed Survey for August previous 9.2
• Friday 3.00pm University of Michigan Sentiment Survey for August previous 90.4

As widely expected, the Fed elected to keep interest rates on hold at 5.25% during last week’s meeting however the key was in the accompanying statement where Bernanke retained his hawkish bias stating that there is still a threat that inflation will fail to moderate. Further weight was added to the argument when import prices (1.5%m/m) exceeded expectations. However, data was largely overshadowed by continued fears surrounding global credit markets triggered by the recent problems with the US sub prime mortgage sector. This lead to wide spread risk aversion and a flight to quality which benefited the US currency at the expense of higher yielding currencies such as the NZD and AUD. This week sees a plethora of data, the main highlights being CPI and retail sales however it could all be overshadowed if external influences continue to dominate. 
 

Euro Data   

• Tuesday 10.00am EU Industrial Production for June previous 0.9%m/m
• Tuesday 10.00am EU GDP for Q2 previous 0.9%q/q
• Thursday 10.00am EU HICP for July previous 1.8%y/y

In the absence of any key data to give directional bias and with much of the focus elsewhere, last week saw the Euro remain within its recent ranges against both the Dollar and Sterling. This week, the market will focus on GDP figures for a health check of the European economy and also HICP to gauge whether inflationary pressures are likely to result in further tightening from the ECB in the months ahead.

Interest rate outlook