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UK Data 

• Monday 9.30am CIPS Manufacturing PMI for September previous 56.3
• Monday 9.30am Mortgage Approvals for August previous 115.0k
• Monday 9.30am Net Consumer Credit for August previous £1.1bn
• Monday 11.00am CBI Industrial Trends Survey for Q3 previous 6.0% bal
• Wednesday 9.30am CIPS Services PMI for September previous 57.6
• Thursday 12.00pm BoE Interest Rate Announcement

Last week further signs that the housing market is beginning to suffer from higher interest rates coupled with bank’s stricter lending criteria. The Nationwide house price survey showed prices rising at 9%y/y, their slowest pace in over a year, coupled with BBA mortgage approvals which showed that the number of new mortgages fell from 67k to in July to 61k in August. However, the news was not all bad for Sterling, GDP was revised up to 3.1%y/y from 3.0%y/y previously and retail sales figures from the CBI exceeded the consensus vote. This week attention turns to the Bank of England interest rate announcement on Thursday where despite widespread expectations that the committee will elect to leave rates unchanged, we have to be aware of the outside chance of a cut.

US Data

• Monday 3.00pm ISM Manufacturing Survey for September previous 52.9
• Tuesday 10.00am Pending Home Sales for September previous -12.2%m/m
• Wednesday 1.15pm ADP Employment Survey for September previous 38.0k
• Wednesday 3.00pm ISM Non Manufacturing Survey for September previous 55.8
• Friday 1.30pm Non Farm Payrolls for September previous -4k
• Friday 1.30pm Unemployment Rate for September previous 4.6%

The Dollar continued to post new lows against the Euro last week, not helped by signs of further weakness in the US housing market. Existing home sales (5.5m) was the lowest since August 2002 and new home sales (795k) lowest to its slowest pace in over seven years. This was coupled with consumer confidence that is beginning to wane and GDP which was revised down to 3.8%q/q from the previous estimate of 4.0%q/q. This week, the focus will be on the labour market following a disappointing Non Farm payroll number last month where we saw job cuts exceed the number of new jobs created for the first time since August 2003.

EU Data 

• Monday 9.00am EU Manufacturing PMI for September previous 54.3
• Tuesday 10.00am EU Unemployment for August previous 6.9%
• Tuesday 10.00am EU PPU for August previous 1.8%y/y
• Wednesday 9.00am EU Services PMI for September previous September previous 58.0
• Thursday 12.45pm ECB Interest Rate Announcement followed by news conference at 1.30pm.

The main highlight last week was European inflation data (2.1%y/y) which rose above the ECB’s 2.0% target level for the first time in a year. The news will confirm expectations that the next move from the ECB will upward although in light of recent market turmoil it is unlikely the move will be seen this week. The focus therefore will be on the accompanying news conference to gauge the committee’s thoughts on the recent credit concerns and also any indication about the timing of the next move.

Interest rate outlook