Morning Report: 23 August 2016

23rd August 2016 By: Ranko Berich

GBP The latest wave of USD weakness seen overnight has seen GBP climb to its highest level against the greenback since the start of the month. No fundamental data was released yesterday, so this morning’s 11:00 BST release of Industrial Order Expectations by the Confederation of British Industry will kick off the week’s calendar. The Index tracking the overall order expectations reported by the surveyed businesses fell into negatives last month, but after some positive UK data releases last week, today’s figure has the potential to lift sterling further if it shows improvement.

EUR The euro is stronger this morning, as August’s preliminary Purchasing Managers Indices for the eurozone have showed another month of solid activity expansion. Eurozone Services and Manufacturing PMIs were both above the 50 level that indicates growth and slightly higher than last month, despite France’s Manufacturing PMI remaining in contractionary territory. Angela Merkel, Francois Hollande and Matteo Renzi held a trilateral summit yesterday on the medieval island of Ventonene, in what appears to have been a largely symbolic show of unity, with no new policy measures announced. Political meetings will continue across Europe ahead of another summit meeting between the 27 members of the EU that will remain after the UK’s departure. Consumer Confidence figures from Eurostat will be released at 15:00 BST.

USD The greenback is under pressure again this morning, after investors appear have lost faith in the Federal Reserve’s recent assurances that interest rates could rise in the near future. Comments from Stanley Fischer, Vice President of the Fed, gave USD a short lived boost yesterday, but this quickly faded in the afternoon and evening. Today at 14:45 BST, Markit’s survey based Manufacturing Purchasing Managers Index will be released, followed at 15:00 by New Home Sales and the Richmond Manufacturing Index.

CAD CAD weakened again yesterday, marking the second consecutive day of losses after several weeks of consistent gains versus USD. Monthly Wholesale Sales data was better than expected, with wholesale sales rising 0.7% in June after a 1.9% increase previously. No data will be released today, but with crude oil prices on the defensive this morning there is plenty of impetus for movement in loonie.

UK News

  • FT. UK economic surprise index leaps to 3-year high. The index, which tracks how data compare with economists’ forecasts, surged from less than 50 to a high of 72.2 last week, the strongest level since 2013. A slew of eagerly data last week, offering some of the first clues as to how the UK economy has fared following the Brexit vote, proved surprisingly robust.
  • The Guardian. Tourist spending in UK surges after pound’s Brexit slump. The tax-free shopping company Global Blue said visitors from Asia and the US have been taking advantage of how much further their own currencies will go in the UK since the June referendum. It reported a 7% year-on-year increase in UK international tax-free shopping in July.