Raft of Eurozone, US Data in Focus

Eurozone GDP, inflation, and unemployment data and US PCE figures are in focus today.

Previous Day's Market Highlights

Overall, the calendar was relatively quiet yesterday, with the dollar under some selling pressure as month-end neared. Sterling-euro continued to trade in the 1.12-1.13 band, while sterling-dollar held in the 1.31-1.32 range, and euro-dollar made gains towards 1.17. For the UK, the main focus of the week is Thursday’s Bank of England meeting and possible interest rate hike.
 
Early Tuesday UK time, the Bank of Japan kept interest rates on hold. It announced it would allow more flexibility over its bond yield target and introduced forward guidance, saying that interest rates would remain “extremely low…for an extended period of time”. The yen saw volatility around the announcement and ultimately ended up softer.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1205 1.1364 1.1163 1.77%
GBP/USD 1.3136 1.3363 1.2958 3.03%
EUR/USD 1.1723 1.1791 1.1575 1.83%
GBP/AUD 1.7686 1.7958 1.7569 2.17%
GBP/NZD 1.9241 1.9622 1.9198 2.16%
GBP/CAD 1.7130 1.7479 1.7106 2.13%

Today's Market Highlights

It’s a busy morning for the euro, which will eye the release of Q2 GDP, July inflation, and the Unemployment Rate (10:00 BST). A pick-up in core inflation and slower GDP growth year-on-year could offset each other, while any surprises to the downside could weigh on the euro. Overall, rates could remain around familiar levels.
 
In the US, Personal Consumption Expenditures (13:30) are forecast to remain unchanged, with core PCE at the Fed’s 2% target level. Overall the figures may be relatively dollar supportive. An acceleration in Canadian GDP (13:30) in May could strengthen the loonie this afternoon. Softer Employment Change could weaken the New Zealand dollar in overnight trading.
 
Tomorrow, the Fed is expected to keep interest rates on hold, which means investors will watch the statement closely for any additional clues on the timing and number of additional rate hikes this year—two more are currently expected, in September and December. On Thursday, the Bank of England is widely expected to raise interest rates by 25 basis points. Should it instead hold steady, this would come as a notable surprise to the downside for the pound.

Today's Economic Calendar

Time Currency Release Consensus Previous
10:00am EUR Preliminary Q2 Eurozone GDP QoQ (Q2) 0.4% 0.4%
10:00am EUR Preliminary Q2 Eurozone GDP YoY (Q2) 2.2% 2.5%
10:00am EUR Unemployment Rate (Jun) 8.3% 8.4%
10:00am EUR Preliminary CPI YoY (Jul) 2.0% 2.0%
10:00am EUR Preliminary Core CPI YoY (Jul) 1.0% 0.9%
1:30pm USD Core Personal Consumption Expenditure - Price YoY (Jun) 2.0% 2.0%
1:30pm USD Personal Consumption Expenditure - Price YoY (Jun) 2.3% 2.3%
1:30pm USD Personal Spending (Jun) 0.4% 0.2%
1:30pm USD Personal Income MoM (Jun) 0.4% 0.4%
1:30pm CAD GDP MoM (May) 0.3% 0.1%
11:45pm NZD Employment Change (Q2) 0.4% 0.6%
11:45pm NZD Unemployment Rate (Q2) 4.4% 4.4%

Caxton