UK & US Retail sales in focus today

Sterling remains fragile against most majors with a No-Deal Brexit cloud hanging over it. US 2s10s (treasury bonds) inverted, signalling imminent recession. The pace of China’s economy is at its slowest in more than 17 years, and the Australia job market posts very healthy numbers pushing it higher vs USD.

Previous Day's Market Highlights

  • The pound hovered close to a nearly three-year low on Wednesday before July inflation data with concerns of a No-Deal Brexit dogging investor sentiment. Money markets give a 60% chance of a one quarter point rate cut by end-December compared to 68% on Tuesday
  • UK consumer price index rose 2.1% year-on-year last month from 2% in July
  • Sterling’s current levels suggest investors aren’t willing to take the British currency away from the deep lows it reached last week
  • Wednesday’s data showed that the Chinese economy continued to slow. Industrial output rose in July at the slowest pace in more than 17 years
  • Poor German exports lead to German GDP slumping into reverse for Q2. This negative post from the European powerhouse puts pressure on the EUR
  • Canadian inflation moderated in June, dropping back down to 2% after printing at 2.4% for the month of May
  • US Export Price Index (YoY) came in above expectations (-1.4%) in July: Actual (-0.9%)
  • President Trump appeared to blame the Fed for the slide in equities, calling Chair Powell “clueless”
Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.0827 1.1246 1.0792 3.89%
GBP/USD 1.2069 1.2578 1.2015 4.70%
EUR/USD 1.1148 1.1285 1.1026 2.30%
GBP/AUD 1.7786 1.8041 1.7560 2.67%
GBP/NZD 1.8728 1.8960 1.8278 3.60%
GBP/CAD 1.6038 1.6438 1.5959 2.91%

Today's Market Highlights

  • RBA have updated their forecast to a 25bp cut in Nov 19 as well as a further cut in Feb 20
  • Australia’s jobs report much stronger than forecast with Employment change coming in at +41k vs 14k exp. AUD strength on the back of this which it has maintained so far this morning
  • Australia Unemployment rate comes in at 5.2%. This is in line with the previous and expected figures
  • Look out for UK retail sales data at 09:30. Sterling will be hoping for a positive result to avoid further losses to the already fragile single currency
  • With Trump continuing to fight against Fed Chair J Powell eyes will be on this afternoon’s retail sales from the US
  • The bond market is flashing its biggest recession signal yet, now that the widely watched spread between the yield on the 2-year Treasury note and 10-year note yield has inverted. This so-called inverted yield curve is a reliable indicator for a recession, measured as two quarters of negative growth

Today's Economic Calendar

Time Currency Release Consensus Previous
2:30am AUD Employment Change (Jul) 14k 0.5k
2:30am AUD Unemployment Rate 5.2% 5.2%
9:30am GBP Retail Sales (YoY) (Jul) 2.6% 3.8%
1:30pm USD Retail Sales (MoM) (Jul) 0.3% 0.4%
1:30pm USD Initial Jobless Claims 214k 209k
1:30pm USD Continuing Jobless Claims 1.690M 1.684M