Morning Report: 10 August 2017

10th August 2017 By: Ranko Berich

GBP Sterling saw a brief rally against USD yesterday before falling back to levels comparable to yesterday’s open as of the time of writing. This morning the Royal Institute of Chartered Surveyors released its House Price Balance, which fell to just 1%, meaning that the balance of surveyors reporting house price increases in their area over those reporting price falls was just 1%. Low stock numbers, political and uncertainty, and tax changes were the three main factors cited by the RICS. Today at 09:30 BST the latest Industrial Production, Goods Trade Balance, and Construction Output figures will be released for the UK. Manufacturing Production is expected to at least be flat after the 0.2% fall seen last month, which contradicted relatively optimistic surveys from the sector.

EUR EURUSD was exciting for one glorious 45 minute period yesterday, when the pair saw a sharp swing to the downside with no immediately apparent cause. The move quickly retraced its steps upwards, but nonetheless set the month’s low for EURUSD. Yesterday’s data included a better than expected reading for Italian Industrial Production. French Industrial Production was not as impressive this morning, and contracted by 1.1%.

USD With “bellicose rhetoric” still in reserve for later this week, the Monex team is once again struggling to come up with metaphors for the ongoing exchange of threats between North Korea and the United States. USD appears to have taken the developments of the last 24 hours in its stride, and is trading slightly up overnight on a broad basis. Yesterday’s data included higher than expected Non-Farm Productivity Growth, and lower than expected Unit Labour Cost Growth for the second quarter. Today’s fundamental data may prove more decisive for the greenback, with the Producer Price Index due for release at 13:30 BST alongside weekly unemployment claims. Producer prices are a direct leading factor for consumer prices, and expectations are for a modest 0.1% increase, meaning the bar is rather low for a beat. The Federal Reserve’s Bill Dudley will speak at 15:00 BST afterwards.

CAD USDCAD continued on its upwards path yesterday, despite a firm print from monthly Building Permits data in Canada, which expanded 2.5% in June. The report featured an upwards revision to May’s already impressive rate of new permits, to 10.7%! Today at 13:30 BST the New House Price Index will be released.

UK news

  • FT: North Korea escalates threat as Tillerson seeks to ease tensions Pyongyang plans firing four missiles towards Guam bases in game of brinkmanship. North Korea said it was considering launching four ballistic missiles to fall near US military bases on the Pacific island of Guam to “interdict” American forces, escalating tensions that US secretary of state Rex Tillerson had sought to ease. The Korean People’s Army said it was “seriously examining the plan for an enveloping strike at Guam through simultaneous fire of four Hwasong-12 intermediate-range strategic ballistic rockets,” state-run news agency KCNA said. This would be “in order to interdict the enemy forces on major military bases on Guam and to signal a crucial warning to the US”. US President Donald Trump on Tuesday warned that further threats from North Korea would be met with “fire and fury like the world has never seen”, although officials later played this down.
  • Reuters: UK house price growth weakest in over four years – RICS British house prices rose at their slowest rate in over four years last month, while the number of sales slowed due to a limited supply of property and continued political uncertainty, a property industry body said on Thursday. The Royal Institution of Chartered Surveyors (RICS) said its monthly house price balance dropped to +1 in July from +7 in June, its lowest since March 2013 and below all forecasts in a Reuters poll of economists. The outlook for prices over the next 12 months was also the weakest since just after last year’s vote to leave the European Union, RICS added, though outright price falls seemed unlikely at a national level. “There is no real indication that the housing market will become materially more affordable anytime soon,” RICS chief economist Simon Rubinsohn said.