Good morning
Well what a scorcher of a weekend. Saturday was warm, but not too warm to have me working in the garden all day long. And when I say all day, I’m talking 12 hours or so of hard graft. By Sunday I was good for nothing, which was handy as it was really too hot to do much at all, and according to the forecast it is going to be even warmer today, hitting highs over 30°c. There isn’t much on the economic calendar today so if it does get unbearable then we may be able to slip away from our desks relatively unnoticed.
Last week saw some volatility in the markets, equities dumped on Monday but by the end of the week had clawed back most, if not all, of those losses. Currencies were volatile on the back of this, GBP saw some wild moves but like the equities, is pretty much back to where it started last week. GBPUSD for example traded down from the Monday morning highs around 1.2800 to 1.2665 on Thursday, before hitting highs around 1.2770 on Friday afternoon, indeed it traded up to 1.2780 earlier this morning.
GBPEUR saw some decent swings as well, moving down from around 1.1700 to 1.1595 by Thursday, only to push back up to 1.1695 on Friday, and even had a little push over 1.1700 this morning.
Not to be outdone, Yen saw some decent moves as well, USDJPY trading down to around 141.70 before hitting a high of 147.90 just a couple of days later. For GBPJPY, this meant a low of 180.10 and a high around 188.35.
So what will this week bring? Well, not much today perhaps, but things certainly pick up through the rest of the week. From the UK we have unemployment early tomorrow, inflation Wednesday, GDP Thursday and retail sales Friday. We also have US inflation Wednesday and retail sales and jobless claims Thursday, with EU GDP Wednesday. Some big data there that the central banks will be watching closely, eyes as always firmly on the US data which may or may not give us any clues as to the Fed decision next month. US headline inflation is expected at 2.9%, with core at 3.2%. Anything lower will boost the chances of a rate cut, possibly a 50bps cut, but if the numbers disappoint to the upside those rate cut expectations could easily be trimmed.
Early Wednesday morning we will have the latest rate decision from RBNZ. Regular readers may remember that earlier this year there was a real feeling that RBNZ may have to increase further from its 5.5% level. Since then rates have been left unchanged and RBNZ have moved from a hawkish to stance to a slightly more dovish stance. NZD weakened after their last meeting in July and has moved even lower since, as the market expects the dovish tone to increase. Some are even talking of a rate cut this week, although the general feeling is that October is more likely,
Elsewhere, Romanian inflation released this morning showed a greater than expected uptick to 5.4% from below 5% the previous month. The higher number follows last week’s rate cut, EURRON wasn’t really moved on either announcement.
The Olympics has finished, and having been pretty nonplussed about the event before it started, I am going to miss the twelve hours of non-stop sport we have enjoyed for the past couple of weeks. There were plenty of highlights, the breakdancing unfortunately was not one of them, although the poor Australian lady who entertained us last week could probably earn a living out of her performance if she played her cards right. A healthy medals haul by GB, surpassing Tokyo’s total, was great to see. US topped the table with 126 medals including 40 golds, China were second with 91 medals but equalling USA’s 40 gold medals.
Football was underway at the weekend, Man City just edged Man Utd in the Community Shield after scoring an equaliser in the last minute of full time and going on to win on penalties. Mark may be happy with Leeds 3-3 draw in their opening match of the season against Portsmouth, it looked like Portsmouth had won it with a penalty two minutes into injury time, only for Leeds to equalise three minutes later. The Premier league begins this Friday with Man Utd playing Fulham.
Have a great day, enjoy the sunshine if you can.
- 19.00 US monthly budget statement
- 01.30 AUS Westpac consumer confidence
- 02.30 AUS wage price index
- 07.00 UK unemployment
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