5th September 2018 Market Update
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?? GBP – In the UK, Bank of England Governor Carney confirmed he was in discussions to extend his term to 2020 to help minimise any potential Brexit-related disruption. Construction figures disappointed keeping the Pound pressured across the board.
The UK Services PMI is out today and expected to show a slight uptick, though any shortfall would indicate weak growth and pressure the Pound further.
?? EUR – Yesterday, data showed the Eurozone producer price index moved higher on an annual basis in July, helped by higher energy prices, though this did little to move the Euro.
Today, services data is expected to remain unchanged and retail sales expected to drop off which may in turn see the Euro lower. In addition, Eurozone finance ministers and central bankers are meeting in Vienna later this week to discuss the economy and how well the Eurozone will handle any interest-rate hikes going forward.
?? USD – Yesterday, US President Donald Trump piled on the pressure on Canada to join the new NAFTA deal agreed to by the US and Mexico. On the data front, US manufacturing surprised to the upside helping the Dollar remain strong. Though markets remain in risk off mode as the emerging markets crisis broadened with South Africa falling into recession and the Indonesian Rupiah tumbling to fresh lows, as a result the relative safety of the USD is being sought and helping keep the Dollar strong.
Today, the public hearing on tariffs on USD200bn worth of Chinese imports is set to end and markets are expecting President Trump to announce the imposition of these tariffs and for China to then retaliate. It is then unlikely to see any deal between the US and China before the US Midterm Elections on 6 November. There will be a number of Fed officials speaking tonight though we are unlikely to hear anything market moving.
09:30am: Services PMI expected at 53.9 from previous 53.5
09:00am: Services PMI expected to remain unchanged at 54.4
10:00am: Retail sales MoM expected at -0.2% from previous 0.3%
Summary: Bank of England Governor Mark Carney has said that he is willing to stay on as Governor till 2020 so that there is minimal impact to the central bank during the Brexit period. Elsewhere, US trade agreements and tariffs are back in focus with Canada under pressure to agree to the new NAFTA deal and China likely to be hit with $200bn of tariffs.
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