Morning Report: 19 July 2016

19th July 2016 By: Ranko Berich

GBP Sterling held up reasonably well yesterday, as risk assets continued to recover from Friday’s coup scare in Turkey, but the pound is under pressure this morning ahead of today’s important inflation data. The Consumer Price Index will be released this morning at 09:30 BST, alongside indices for House Prices, Producer Prices, and Retail Prices. The data pertain to June, so include some pricing decisions made after the EU referendum. A large deflationary shock is likely to intensify speculation that the Bank of England will ease monetary policy in August, as was hinted at strongly in last week’s meeting minutes. Later today, the Monetary Policy Committee’s Ben Broadbent will testify to lawmakers at 15:05 BST. Broadbent’s hawkish MPC colleague Martin Weale caused sterling to strengthen slightly yesterday on comments that he would not necessarily be voting to ease policy.

EUR The euro is also under pressure against USD this morning, having mounted a small rally over the course of yesterday. Details emerged yesterday of the nature of the European Central Bank’s bond buying programme, and it appears that the ECB has as promised purchased a mix of corporate, government, and asset backed securities. Today at 10:00 BST the widely followed ZEW Economic Sentiment indices will be released for Germany and the eurozone, based off large samples of institutional investors and analysts.

USD USD had somewhat of a quiet day yesterday, gaining overnight against AUD and NZD on the RBNZ implementing more mortgage lending controls, while weakening slightly to GBP and EUR. The NAHB Housing Market Index was broadly stable in July, as the surveyed home builders remained confident about current and expected output. Today at 13:30 BST more housing market data will be released, in the form of Building Permits and Housing Starts, while the spectacle of the Republican National Congress is likely to continue to attract media attention.

CAD The loonie has had an eventful 24 hours, weakening yesterday afternoon before posting a short lived rally in the evening that dissipated this morning. Foreign Securities Purchases data showed external purchases of Canadian securities falling slightly in May, but much of the loonie price action was linked to developments in crude oil prices.