Busy week for sterling
A market update from Carl Hasty, director of Smart Currency Business.
Sterling saw a positive end to the week, drifting higher against both the euro and US dollar as it found support across the board despite lingering fears over a potential Brexit.
A quiet start to the week for sterling, with no significant economic data set to be released until Wednesday. However, investors will be keenly awaiting the testimony of Bank of England (BoE) governor Carney on tomorrow, in case he should reveal any further thoughts on future monetary policy.
Wednesday will be a key date for sterling as we see the release of labour data from the UK, with wage growth expected to remain at a healthy 2.1% over the past three months. Unemployment is also forecast to remain at 5.1%, although any variation from this figure could see significant movement for sterling. Wednesday will also see chancellor George Osbourne speaking to the Treasury Select Committee about the costs and benefits of the UK’s membership in the EU.
Retail sales data will cap the week off on Thursday, with investors hoping for an increase from the previous month’s contraction of 0.4%.
The ECB in focus this week
The euro ended on a mixed note on Friday as it strengthened against the US dollar after worse-than-expected reports were released from the US, but the single currency weakened off slightly against sterling as investors began to unwind their positions before the weekend. Overall, a slow finish for the euro on Friday as there was no significant data released.
On Tuesday business confidence data will be released out from Germany. This is anticipated to tick up slightly from 50.7 to 52. Anything above 50 indicates expansion, and any unexpected results could lead to movements for the single currency.
Investors will also be looking towards the European Central Bank (ECB) on Thursday for their latest monetary policy decision. No change is expected, but investors will look for clues as to what course of action the central bank could take in the near future.
On Friday, we expect a slew of Purchasing Managers’ Indices (PMIs), in terms of manufacturing and services PMI data for France, Germany, and Flash figures for the Eurozone as a whole.
Manufacturing data due from US this week
It was a fairly quiet Friday for the US dollar in terms of market movement and data releases. The dollar remained stable against the majority of currencies as Consumer Sentiment data failed to surpass the previous month’s figure, as expected.
We can expect a quiet week for data releases this week, with the weekly unemployment claims due out on Thursday, which is expected to post another stable figure. In addition to this, we will see flash Manufacturing Purchasing Manager’s Index (PMI) on Friday, which is expected to show further growth in the sector. Other than these, the US dollar markets will continue to be influenced by concerns over the global economy as a whole.
Key data from Australia and Canada this week
This week the Australian economy sees its most important economic data out on Tuesday, when the Reserve Bank of Australia (RBA) releases its monetary policy meeting, with RBA governor Stevens also set to speak.
Friday sees Canadian core Consumer Price Index (CPI) and core retail sales data just after noon, both of which are expected to be lower than last month’s figure. Any positive surprises could spell strength for the Canadian dollar.