A very busy week for sterling beckons
A currency market update from Carl Hasty, director of Smart Currency Business.
The flow of UK data releases was minimal last week. The most exciting event seemed to be England beating the Australians at cricket. This week will be very different with the flow of UK data releases high and the potential for sterling seeing some significant movement much higher although it would be nice if we continued to beat the Australians at cricket.
The week ahead sees a raft of data released from the UK. Monday sees the first of the week’s Purchasing Managers’ Index (PMI) data, for manufacturing – while data from the construction sector follows on Tuesday. Investors will be keenly awaiting service industry data due on Wednesday, but Thursday looks set to be the most influential day as the Bank of England (BoE) releases their interest rate decision, minutes from their last meeting, and inflation report in the same day. Most analysts expect the BoE to raise interest rates in early 2016, and investors will be looking for any indicators in these minutes and the other data releases.
Euro ends week on a high
The single currency gained against both the US dollar and sterling on Friday; this was in spite of both Eurozone unemployment rate and Italian preliminary Consumer Price Index (CPI) data coming out worse than expected, and was mainly down to poor US data. Furthermore, with sterling investors closing out their positions ahead of the weekend, the euro was able to end the week on a high-note.
This morning we see Manufacturing Purchasing Managers’ Index (PMI) data from a host of key Eurozone states. Expectations are for Germany, Italy and Spain to keep expanding, while France is forecast to remain in contraction. Other key data to keep an eye out for will be the figure for Eurozone Retail Sales, which is to be released on Wednesday, and is forecast at -0.1%.
US dollar falls down thanks to poor data
Poor economic data for US released on Friday meant the week ended on a low for the dollar – dampening the expectations for a rate hike in the future.
Consumer Sentiment Index data fell to 93.1 in July from 93.3 in June, despite expectations that it would rise to the 94.0 level. The Labour department also noted that the cost of employment rose only 0.2% – which is the lowest gain since 1982.
Looking at the week ahead Monday and Tuesday are relatively quiet for the dollar – but on Wednesday we will see the release of the Non-farm data, and Thursday afternoon will bring unemployment claims, which is expected to come at 269,000, higher than previous levels. Finally on Friday the Non-farm employment change and Unemployment rate data will be released, and if these come out positive as expected, we could see a rise in the value of the US dollar against a basket of major currencies.
Australian dollar finally strengthens as Canadian counterpart continues its fall
Friday was a good day for the Australian dollar, as it gained, at one stage, 1% on sterling. This week ahead is a very busy one for the Antipodean currency: tomorrow we will see the release of Retails Sales, Trade Balance and the Cash Rate data. This will be followed on Thursday with the publishing of unemployment claims figures – which may well include a few of their top batsmen after last week’s performance.
The Canadian dollar lost a cent against sterling on Friday – continuing a worrying trend. This week the trade balance is released on Wednesday – but Friday is the busiest day with Employment Change figures, the Unemployment Rate & the Ivey Purchasing Managers’ Index data all released. These are all major market indicators, and some good results this week could hopefully boost the Canadian dollar.