Previous Day's Market Highlights
The UK’s Construction PMI slid more than expected to 52.9 from 55.8, a three-month low. The index had been forecast to drop only to 54.9. This followed a decline in the Manufacturing PMI from 53.8 to 52.8, also a larger-than-forecast dip. The 50 mark in PMIs is key; above 50 is consistent with industry expansion, below 50 with industry contraction. The pound dipped slightly on the release.
The South African rand tumbled yesterday after Q2 GDP showed that the economy had entered into a recession for the first time since 2009. Growth declined by 2.6% in Q1 and by 0.7% in Q2, compared to forecasts of 0.6% growth. A technical recession is defined by a fall in growth during two consecutive quarters. The rand is currently trading at its weakest levels against the pound and the US dollar since June 2016.
The Aussie dollar jumped overnight after Q2 GDP surprised to the upside. Growth accelerated to 3.4% year-on-year, the fastest pace in six years, whilst the economy also grew more strongly than expected quarter-on-quarter.
BoE Governor Carney’s future at the Bank remained in focus at the Inflation Report Hearing, following reports that he could again extend his term (Carney had initially agreed to serve five of the eight-year term before extending until June 2019 to see the UK through its March 2019 exit from the EU). Carney said he had discussed the possibility of a further extension with Chancellor Hammond and a decision will be announced soon.
|Currency Pairing||08:00 Today||Vs 08:00 Yesterday||Four-Week High||Four-Week Low||% Change|
Today's Market Highlights
The dollar has firmed this morning, gaining against the pound within the 1.28-1.29 band and against the euro within the 1.15-1.16 band. The South African rand has seen additional losses.
Turning to the day’s calendar, the UK releases its final PMI of the week this morning (09:30 BST). The Services index is forecast to tick up slightly and will be closely watched after larger-than-expected slides in the previous two PMI releases this week.
In the afternoon, markets will keep an eye on trade balance figures from the US and Canada, but the main event is the Bank of Canada interest rate decision. The BoC is widely expected to keep interest rates on hold; while a surprise hike could cause a jump in the loonie, markets are favouring an October move. A hawkish hold could still provide some support to the loonie, although the Bank may still strike a note of caution on trade tensions with the US. Loonie traders will also keep an eye on any further trade headlines.
Today's Economic Calendar
|9:30am||GBP||Markit Services PMI (Aug)||53.9||53.5|
|1:30pm||USD||Trade Balance (Jul)||$-50.1B||$-46.3B|
|1:30pm||CAD||Trade Balance (Jul)||$-1.20B||$-0.63B|
|3:00pm||CAD||BoC Interest Rate Decision||1.5%||1.5%|
|3:00pm||CAD||BoC Rate Statement|
|8:00pm||USD||Fed's Williams Speaks|
|9:00pm||USD||Fed's Kashkari Speaks|
|9:15pm||USD||Fed's Williams Speaks|
|11:30pm||USD||Fed's Bostic Speaks|
|2:30am||AUD||Trade Balance (Jul)||900M||1,873M|