HiFX: Foreign Exchange Specialists

• Weekly briefings
• Archive

UK Data
 

• Monday 7.00am Nationwide House Prices for August previous 10.3%y/y
• Wednesday 11.00am CBI Industrial Trends Survey for August previous -6.0
• Friday 9.30am GDP for Q2 previous 3.0%y/y

In contrast to recent figures from the BRC, last week’s retail sales figures from the ONS showed a sharp rise in high street activity helped by heavy discounting over the summer period. There was also evidence that inflation seems to be coming under control when the headline CPI figure (1.9%y/y) fell below the Bank of England 2.00% target rate for the first time since March 2006. This news will re-fuel the debate as to the likelihood of further tightening from the MPC in the months ahead. Whilst another hike before the end of the calendar year remains highly probable, the outlook beyond that is now uncertain. This was confirmed by the release of the minutes from the MPC’s last meeting which revealed a 9-0 vote in favour of no change in August and indicated that most members had no firm view as to whether rates would need to rise again in the months ahead. This week, the market will focus on housing data for further signs that recent rate rises are having an impact on the UK housing market and GDP data for a health check on the UK economy.

US Data

• Friday 1.30pm Durable Goods Orders for July previous 1.3%m/m
• Friday 3.00pm New Home Sales for July previous 834k

Last week’s data was largely overshadowed by continued risk aversion in the financial markets where higher yielding currencies such as the AUD and NZD lost further ground against the low yielding Japanese Yen. In similar fashion, oversold Dollar positions became unwound resulting in GBP/USD falling back below the psychological 2.0000 level against Sterling. Data was once again mixed and certainly did not support the advancing Dollar with stronger than expected retail sales and a narrower trade balance being offset by disappointing capital inflows and waning consumer confidence. This week, attention turns to durable goods orders and new home sales, both on Friday, however once again these could be overlooked if external forces continue to dominate.

Euro Zone Data

• Tuesday 10.00am German ZEW Economic Sentiment Survey for August pervious 10.4
• Tuesday 10.00am EU Trade Balance for June previous €1.7bn
• Wednesday 10.00am EU Industrial New Orders for June previous 1.7%m/m

Last weeks data was all broadly in line with expectations, and consequently the Euro continued to trade a tight range against Sterling while losing a little ground to a strengthening Dollar. This week, the market will focus on the German ZEW Survey to see whether or not there is any improvement in the recent downturn in economic sentiment in Europe’s largest economy.

Interest rate outlook