UK Data
- During the Week Nationwide House Price Survey for June. Previous -4.4%y/y
- Monday 12.01am Rightmove House Price Index for June. Previous 2.2%y/y Actual 0.1%y/y
- Tuesday 9.30am BBA Mortgage Approvals for May. Previous 38.7k
- Wednesday 11.00am CBI Distributive Trades for June. Previous -14.0
- Friday 9.30am Current Account for Q1. Previous -£8.5bn
- Friday 9.30am GDP for Q1. Previous 0.4%q/q & 2.5%y/y
Last week proved mixed for Sterling amid conflicting expectations about where UK interest rates were heading. The Pound tumbled on Tuesday after the BoE said it was uncertain about the path to get British inflation back on track following higher than expected CPI data. Consumer prices rose 3.3% on the year, considerably above the BoE’s 2.0% inflation target, prompting an open letter to the Chancellor. In the letter, Governor Mervyn King said the Bank was in no position to raise rates given the weakness of the economy and the risk posed to financial markets. However, Sterling surged on Thursday after a surprise jump in UK retail sales prompted hopes that the economy might be holding up better than originally thought. The ONS revealed sales rose 3.5% in May, the fastest monthly increase on record and confounding expectations for a slight fall. This week’s housing data is expected to show further deterioration as affordability and consumer confidence remain weak in light of the extended economic and financial uncertainty.
US Data
- Tuesday 3.00pm Consumer Confidence for June. Previous 57.2 index
- Wednesday 1.30pm Durable Goods Orders for May. Previous -0.5%m/m
- Wednesday 3.00pm New Home Sales for May. Previous 526k
- Wednesday 7.15pm FOMC Interest Rate Announcement
- Thursday 1.30pm Core PCE Price Index for Q1. Previous 2.1%q/q ann
- Thursday 1.30pm GDP Annualised for Q1. Previous 0.9%q/q ann
- Thursday 3.00pm Existing Homes Sales for May. Previous 4.89mn
- Friday 2.55pm University of Michigan Sentiment Survey for June. Previous 56.7 index
The Dollar weakened across the board last week after weak economic data raised speculation that the Federal Reserve might not raise interest rates as quickly as first thought. Meanwhile, a rebounding oil price coupled with a ratings downgrade of two US insurers on Friday raised fresh concerns over the financial sector and broader US economic health. This week’s data takes a back seat to Wednesday’s FOMC rate announcement, with the market expecting no change.
EURO Data
- Monday 9.00am German IFO Business Sentiment Survey for June. Previous 103.5 index Actual 101.3
- Monday 9.00am Manufacturing PMI (Flash Estimate) for June. Previous 50.6 index Actual 49.1
- Monday 9.00am Services PMI (Flash Estimate) for June. Previous 50.6 index Actual 49.5
- Wednesday 10.00am EU Industrial New Orders for April. Previous -1.0%m/m
- Friday 9.00am Current Account (nsa) for April. Previous -€7.8bn
The Euro jumped to a two-week high against the Dollar last week after rising consumer prices cemented expectations of a rate hike in July. Surging food and fuel prices drove Eurozone CPI to a fresh record high of 3.7% in May, the highest annual rate since measurements for the Eurozone began in 1997. However, Euro gains were tempered somewhat after German investor confidence fell its lowest level for almost 16 years according to the ZEW index, highlighting the nervousness in Europe’s largest economy. This week’s main focus is Monday’s German June IFO survey, expected to dip lower, mirroring last week’s ZEW number, following a partial rebound in May.
Interest rate outlook
| Country |
Current rate |
Last change |
Date of change |
Next meeting |
| UK (MPC) |
5.00% |
-25bps |
10/04/08 |
10th July |
| US (FED) |
2.00% |
-25bps |
30/04/08 |
25th June |
| EU (ECB) |
4.00% |
+25bps |
06/06/07 |
3rd July |