Monthly Archives: August 2024

Today’s economic calendar is light in terms of economic data releases. Already released this morning, the number of new purchase orders in Germany increased by 3.9 percent in June (forecasted 0.5%).

In the Eurozone, investors will keep a close eye on the retail sales data. Markets are pricing in a marginal fall by – 0.1 percent in June.

Over the course of the last week, the markets have experienced increased volatility following the Bank of England’s close call (5-4 vote in favour of a cut) to reduce interest rates.

The Pound has been on the retreat and has lost much of its year-to-date gains against the Euro. It was only last month that GBPEUR hit a two-year high trading above 1.1900.

GBPUSD has moved 150 pips since the beginning of this month. The fall in the number of new jobs added (down for the second time this year) and the rise of the unemployment rate to 4.3 percent has placed pressure on the Federal Reserve to cut interest rates promptly. 

This week, the home front has a packed data schedule. A number of releases will provide an update on economic circumstances at the beginning of the third quarter. This will contain the announcement of the Exchequer Returns, unemployment rate, and July services PMI. Meanwhile, CPI inflation data for July is also due.

Additionally, the data calendar is extremely sparse. The Eurozone’s biggest feature will be retail sales in June. Sales are expected to increase by 0.1% this month, leaving them 0.2% higher year over year. Meanwhile, producer price inflation is expected to stay in negative territory, at -3.3% in June, up from -4.2 percent in May.

The German economy contracted again in the second quarter due to continued structural and cyclical pressures. Against this environment, industrial output has been declining over the last several years. Indeed, a slight 1% increase in output is projected for June, following a severe 2.5% drop in May.

In the United States, the only noteworthy release will be the non-manufacturing ISM for July. The index has fluctuated in and around the critical 50 threshold for some months, and this trend is likely to continue in July, with the ISM climbing to 51.0 from 48.0 in June. This week’s data calendar in the United Kingdom appears empty.

For additional insights on how this could affect your business or to capitalise on market volatility – please reach out to speak to one of our experts.

Yesterday, the BoE MPC voted 5 to 4 in favour of a 25bps rate drop. In the run-up to the announcement, markets anticipated a close call, with pricing leaning slightly towards a rate drop.

Meanwhile, the meeting summary, minutes, and press conference provided virtually little insight on the future course of policy.

Data-wise, the US manufacturing ISM for July fell considerably below the consensus of 48.8, to 46.8. New orders and employment were very low this month.

Meanwhile, US first unemployment claims increased to +249k, the biggest amount in nearly a year. In the Eurozone, the unemployment rate increased to 6.5% in June (compared to 6.4% forecast).

Yesterday, market rate expectations fell as a result of the BoE’s move to decrease interest rates and data disappointments in the United States and Europe. The Eurozone is forecast to ease policy by around 55 basis points between now and the end of the year, while rate cuts of 85 basis points and 40 basis points are priced in for the US and UK, respectively.

Looking ahead, payrolls are predicted to grow by 175k, down from +206k in June, while the unemployment rate remains at 4.1%. The announcement may affect the dollar.

For additional insights on how this could affect your business or to capitalise on market volatility – please reach out to speak to one of our experts.

Last night the USA released their latest Monetary Policy Statement, as expected the interest rate has stayed the same, markets are growing increasingly confident that a rate cut in September could be on the cards.

Stealing the show today is the Bank of England, they will announce their latest interest rate decision with forecasts showing no cuts this month.

Focus will then shift to the meeting minutes, investors will be keen to listen in to the Bank of England’s stance on a September rate cut.

Later this afternoon sees the US release Employment figures and Purchase Manager Index, with the latter expected to come in at 48.8, an increase in last months figure but still below the 50 growth mark.

The pound has taken a hit this morning following the release of last nights Fed interest rate decision, as of this morning the pound is down 60 points.

The same can be said for the pound/euro pairing, with the pound falling 40 points.

For additional insights on how this could affect your business or to capitalise on market volatility – please reach out to speak to one of our experts.