Markets quiet ahead of key data later in the week
29/Jul/2014 • Currency Updates•
Markets across the board were extremely slow out of the blocks on Monday morning as the sleepy holiday season kicks in. Sterling was unchanged across the board, although it did manage to snap back a little of what was lost against the dollar last week.
The low volatility can also be put down to a lack of data; nothing of any note was released yesterday.
The major news from last week was the triumphant return of the UK economy to pre-crisis GDP levels. Strong growth and low unemployment figures are certainly signs of success and a cause for joy, but investors are cautious over the distribution of the recovery – manufacturing is still lagging behind the 2008 peak and wages are struggling to keep up with inflation.
This week we have not much to look forward to, but we start with mortgage approvals for June and net lending to individuals released today.
No movement in the single currency yesterday at all.
Markets are perhaps pensive ahead of some key data releases later in the week, particularly from the US and the EU.
We could see some movement today as the EU prepares to finalise a new round of economic sanctions against Russia. It is also worth keeping an eye on the price of oil and safe haven assets such as gold.
Today we have retail sales from Spain and inflation from Greece, ahead of the all-important CPI reading for the EU on Thursday.
No real movement in the dollar yesterday aside from a slight retracement against the pound. The dollar passed a key psychological barrier over the weekend, and if we see much more downward movement this week we will have to ask if the long predicted dollar strength might finally come true.
Mixed bag of data from the US yesterday; retail sales came in slightly above expectation, at 60.9, but this marked a decline in MoM terms. New home sales fell MoM by 1.1%, which makes it -7.3% for the year now. The housing market seems to be the only major US market not showing strong signs of improvement, although this perhaps isn’t surprising given recent history.
Q2 corporate earnings season is in full swing now. Deutsche Bank posted income of 237m euro, almost half of expectations, as low volatility across markets affected the performance of their market trading divisions. This is a story appearing again and again.
Only red book MoM and YoY and consumer confidence to look forward to.
Rest of the world
Elsewhere the central bank of Israel cuts its headline interest rate to just 0.5%, a new record low. The official reason behind the move was stalling inflation, although it is hard to look last the ongoing Palestine conflict as the true cause for concern. The shekel weakened as a result.
The Russian rouble fell to its lowest level since May, after a 1.1% against the dollar. Fresh EU and US sanctions today could pile yet more pressure on the currency.