Sterling Awaits Services PMI

UK Construction PMI fell from 51.9 to 51.1, versus a projected gain, weighing on the pound as the week kicked off. Eurozone Producer Price Index data then fell short of forecasts, weighing on the euro as traders look for signs that prices are accelerating in the Eurozone.

Previous Day's Market Highlights

UK Construction PMI fell from 51.9 to 51.1, versus a projected gain, weighing on the pound as the week kicked off. Eurozone Producer Price Index data then fell short of forecasts, weighing on the euro as traders look for signs that prices are accelerating in the Eurozone.
 
Sterling-euro held above 1.0845 but again met resistance ahead of 1.0900. Sterling-dollar fell towards 1.2900 as euro-dollar traded either side of 1.1900.
 
Australia’s Q2 current account deficit widened more than forecast. However, the currency picked up as net exports rose, which is expected to add to GDP figures out tomorrow. The RBA kept interest at 1.5% as was widely expected. The Aussie briefly weakened as the RBA referenced the negative implications of a stronger Aussie dollar for economic growth, prices, and employment. 

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP / EUR 1.0861 1.1102 1.0745 3.22%
GBP / USD 1.2928 1.3054 1.2777 2.12%
EUR / USD 1.1903 1.2070 1.1662 3.38%
GBP/AUD 1.6206 1.6570 1.6165 2.44%
GBP / NZD 1.8020 1.8112 1.7522 3.26%
GBP / CAD 1.6017 1.6567 1.6006 3.39%

Today's Market Highlights

This morning, the UK releases its final PMI for the services industry (09:30 BST), which represents over 70% of the economy. The index is forecast to dip from 53.8 to 53.5, which may weigh on the pound.
 
Attention then turns to Eurozone Retail Sales (10:00 BST), forecast to slow, which may weigh on the euro ahead of Thursday’s ECB meeting. ECB President Draghi is expected to acknowledge the euro’s recent strength, but markets are now expecting that any explicit guidance on the QE programme may not come until later in the year after Friday’s Bloomberg report to that effect.  
 
RBA Governor Lowe speaks at the Reserve Bank Board Dinner (10:10 BST), and markets will watch for any additional guidance on the direction of monetary policy, following the decision today to keep interest rates on hold and the caution expressed over the currency’s strength.
 
The US’s main release of the afternoon is July’s Factory Orders (15:00 BST), but attention will primarily be on the three Fed speakers. Brainard and Kaplan will both address the economy (13:00, 23:05 BST), while Kashkari speaks on business leadership (18:10 BST).
 
The comments will be closely watched for any guidance on the direction of monetary policy ahead of the meeting later this month. Currently, markets are pricing in less than a 50% chance that the Fed will hike rates in December. 

Today's Economic Calendar

Time Currency Release Consensus Previous
09:30 GBP Services PMI (Aug) 53.5 53.8
10:10 AUD RBA Governor Lowe Speaks
11:00 EUR Retail Sales YoY (Jul) 2.5% 3.1%
11:00 EUR Retail Sales MoM (Jul) -0.1% 0.5%
13:00 USD Fed Member Brainard Speaks
15:00 USD Factory Orders MoM (Jul) -3.2% 3.0%
NZD Global Dairy Trade Price Index -0.4%
18:10 USD Fed Member Kashkari Speaks
23:05 USD Fed Member Kaplan Speaks
02:30 AUD GDP QoQ (Q2) 0.8% 0.3%
02:30 AUD GDP YoY (Q2) 1.8% 1.7%