Morning Report: 7 August 2017

7th August 2017 By: Ranko Berich

GBP GBPUSD is back nearer the bottom of its two week trading range after the US dollar finally showed signs of life after some good domestic data on Friday, although that trading range still remains the highest the pair has been over the past year. This week’s calendar is far less exciting in terms of fundamental data than last week’s, with this morning’s only release of note the Halifax House Price Index, which increased 0.4% in July, slightly above expectations. Later in the week Industrial and Construction Output data will be released alongside the Goods Trade Balance on Thursday.

EUR The euro finally pared back some of its recent gains versus the US dollar on Friday, and has failed to recover the majority of its losses as of this morning. There’s been much chatter among currency strategists about the euro being overbought after this year’s spectacular 15% rally, and so this week will prove crucial for EURUSD in particular for judging how much momentum the single currency retains. This morning’s data has included German Industrial Production, and Sentix Investor Confidence will be released at 09:30 BST.

USD After hard losses earlier in the week, Friday’s Non-Farm Payrolls report bought USD some breathing room, and the greenback rallied on Friday, retaining most of its gains through to this morning. Headline job creation beat expectations and reached 209,000 in July, while wages also grew faster than expected and labour force participation increased, making it a good report overall. Today the Federal Reserve’ Labour Market Conditions Index will be released at 15:00 BST, followed by a speech from the Fed’s Neel Kashkari at 18:25 and Consumer Credit at 20:00. Later in the week, Producer Prices will be released on Thursday, followed by Consumer Price Index data on Friday.

CAD The loonie was very much on the back foot last week, finally paring back its gains after a seemingly relentless rally over summer. Frida’s data was slightly shy of expectations generally, with a bigger than expected Trade Deficit for June, although the Unemployment Rate unexpectedly fell to 6.3%. Today is Civic Day in Canada, and no data will be released.

UK news

  • FT: China says North Korean missile threat reaching ‘crisis point’ US and S Korean presidents affirm Pyongyang poses ‘grave’ direct threat in phone call. China’s foreign minister warned his North Korean counterpart that the situation on the Korean Peninsula was close to “crisis point”, a day after the UN unanimously voted for its strongest economic sanctions yet against Pyongyang. Hours later, the South Korean president requested a phone call with US President Donald Trump on Sunday night, in which the White House said both leaders affirmed that North Korea posed “a grave and growing direct threat to the United States, South Korea, and Japan”. The White House said Mr Trump and Mr Moon welcomed the new UN resolution and “committed to fully implement all relevant resolutions and to urge the international community to do so as well”.
  • Reuters: UK house price growth weakest in more than four years – Halifax British house prices rose at their slowest pace in more than four years in the three months to July as households felt the pinch of inflation which is rising faster than wages, mortgage lender Halifax said on Monday. Average house prices in the period were 2.1 percent higher than a year earlier, slowing from a 2.6 percent increase in June’s figures and down from growth of more than 8 percent in July last year, Halifax said. Economists in a Reuters poll had expected a 2.0 percent rise.