Sterling drops on overnight data, market awaits NFP
01/Αυγ/2014 • Currency Updates•
The pound fell off right at the open after overnight consumer confidence data hit markets. There wasn’t much data out for the rest of the day so sterling stayed submerged around 0.3% under.
All we had yesterday was a house price index from Nationwide, which showed a less than expected 10.6% YoY increase, and just 0.1% MoM. There are a number of factors that are likely contributing, including BoE recent regulations, the scaling back of the government right to buy scheme, a general economic deceleration and even Russian sanctions.
Not much more to look forward to today, with just Markit manufacturing PMI for July. With manufacturing the least impressive of the UK’s major industries this year, it will be interesting to see if businesses export growth in the sector.
Plenty of mid- and high-tier data yesterday. German retail sales were up MoM to 1.3% but down YoY to 0.4%. French inflation crawled back to a flat 0 after recording -0.1% last month. Italian inflation disappointed and Greek retail sales declined. Across the EU, inflation came in at 0.4% YoY, a very disappointing result that leaves price growth at less than a quarter of target. Unemployment however managed to surprise markets in a positive way, dropping 11.5%. Although not a major change, certainly a step in the right direction.
Needless to say, yesterday saw a mixed bag of data. Markets were unsure how to react, and in the end movement was muted. Even with inflation falling again Mario Draghi is unlikely to reduce rates again or increase stimulus, his goal is medium term price growth and it has only been 2 months since the last policy easing. The ECB meets again on the 7th August in Frankfurt.
Plenty to look out for today, with Markit manufacturing from Spain, Italy, Germany, France, Greece and the EU as a whole.
After the initial movement in sterling, markets were relatively quiet across the board. Data from the US yesterday came out pretty close to the mark, so market reaction was muted.
Initial jobless claims for the week to the 25th came in at 302k against 301k called, while continuing figures edged up slightly. Chicago PMI came in at a relatively poor 52.6, but this still constitutes expansion.
Jobless claims are of course the key figure today, with a powerful c. 230k being called. This would make it 6 months in a row of +200k growth in the labour market. As ever, it is important to delve a little deeper than simple headline figures, so data such as participation rate and personal income will also be heavily scrutinised.
Other US data includes manufacturing PMI, consumer sentiment and personal consumption.