Sterling Looks to Production, Trade Data

Heightened tensions between the US and North Korea yesterday weighed on stock markets and sparked a flight to safe havens, including gold and the Swiss franc. The VIX, an index measuring the market’s volatility expectations, rose to one-month highs.

Previous Day's Market Highlights

Heightened tensions between the US and North Korea yesterday weighed on stock markets and sparked a flight to safe havens, including gold and the Swiss franc. The VIX, an index measuring the market’s volatility expectations, rose to one-month highs.
 
Sterling-euro recovered ground but held below 1.1100. Sterling-dollar traded either side of 1.3000. Euro-dollar held below 1.1800.
 
Positive housing data and a greater-than-expected decline in weekly EIA Crude Oil Inventories had limited impact on the Canadian dollar, which lost ground to the pound across the course of the afternoon.
 
The RBNZ kept interest rates on hold at 1.75% as was widely expected. After initial strength, the kiwi fell against the pound as the Bank’s statement and later comments from Governor Wheeler and Assistant Governor McDermott referenced the need for a lower NZD. Sterling-kiwi rose to one-week highs. 

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP / EUR 1.1059 1.1438 1.1003 3.80%
GBP / USD 1.2975 1.3272 1.2890 2.88%
EUR / USD 1.1732 1.1912 1.1370 4.55%
GBP/AUD 1.6465 1.6805 1.6269 3.19%
GBP / NZD 1.7831 1.7994 1.7398 3.31%
GBP / CAD 1.6502 1.6727 1.6238 2.92%

Today's Market Highlights

The UK releases production and trade data this morning (09:30 BST). A pick-up in Manufacturing and Industrial Production and a narrower trade deficit in June may offer the pound some support, although limited gains may in turn see limited sterling strength. The greater risk may be to the downside if the data disappoint given sterling’s current vulnerability.
 
The US’s Producer Price Index and Initial Jobless Claims will be in focus ahead of tomorrow’s key CPI release (13:30 BST). Fed Member Dudley speaks this afternoon on regional wage inequality (15:00 BST).   
 
The key release of the week for the US is Friday’s CPI data. The recent softening of inflation has weighed on rate hike expectations and will be closely watched by markets and the Fed alike. 

Today's Economic Calendar

Time Currency Release Consensus Previous
09:30 GBP Manufacturing Production YoY (Jun) 0.6% 0.4%
09:30 GBP Manufacturing Production MoM (Jun) 0.0% -0.2%
09:30 GBP Industrial Production YoY (Jun) -0.1% -0.2%
09:30 GBP Industrial Production MoM (Jun) 0.1% -0.1%
09:30 GBP Goods Trade Balance (Jun) £-11.000B £-11.863B
09:30 GBP Total Trade Balance (Jun) £-2.500B £-3.073B
13:00 GBP NIESR GDP Estimate 3M (Jul) 0.3% 0.3%
13:30 USD Producer Price Index YoY (Jul) 2.2% 2.0%
13:30 USD Core Producer Price Index YoY (Jul) 2.1% 1.9%
13:30 USD Initial Jobless Claims (Aug 4) 240K 240K
13:30 CAD New Housing Price Index MoM (Jun) 0.4% 0.7%
15:00 USD Fed's Dudley Speaks
23:30 NZD Business NZ PMI (Jul) 56.2
00:30 AUD RBA Governor Lowe Speaks