UK Data
- During the Week Nationwide House Prices for July. Previous -6.3%y/y
- Monday 9.30am Current Account for Q2. Previous -£8.4bn
- Tuesday 9.30am BoE Mortgage Approvals for June. Previous 42.0k
- Tuesday 11.00am CBI Distributive Trades Survey for July. Previous -9.0 index
- Thursday 12.01am GFK Consumer Confidence Survey for July. Previous -34.0 index
- Friday 9.30am CIPS Manufacturing PMI for July. Previous 45.8 index
Sterling advanced to a two-month high against the Euro last week, after the minutes from the BoE’s July monetary policy committee revealed a surprising three-way split on the best path for UK interest rates. The minutes showed one member of the nine-strong committee voting for a hike to combat inflation. The news surprised investors who were expecting the only dissent from the decision to keep rates on hold at 5.0% would be for a vote for a cut. However, the Pound failed to hang onto gains after a sharp fall in UK consumer spending heightened fears that the country was headed into a recession. UK retail sales fell 3.9% in June, far worse than expected and cancelling out the surprise jump in spending recorded in May as tighter credit conditions and higher living costs took their toll. UK house prices and consumer confidence are expected to dive lower this week as the mood surrounding the British economy darkens.
US Data
- Tuesday 3.00pm Consumer Confidence for July. Previous 50.4 index
- Wednesday 1.15pm ADP Employment Survey for July. Previous -79k
- Thursday 1.30pm Core PCE Price Index (Annualised) for Q2. Previous 2.3%q/q ann
- Thursday 1.30pm GDP (Annualised) for Q2. Previous 1.0%q/q ann
- Thursday 2.45pm Chicago PMI for July. Previous 49.6 index
- Friday 1.30pm Non-farm Payrolls and unemployment Rate for July. Previous -62.0k & 5.5%
- Friday 3.00pm Factory Orders for June. Previous 0.6%m/m
- Friday 3.00pm ISM Manufacturing Survey for July. Previous 50.2 index
The Dollar rallied across the board last week, boosted by a falling oil price and attempts by US authorities to soothe fears over the health of the US financial system. Hank Paulson, US Treasury Secretary reiterated on Tuesday that a strong Dollar was “very” important to US interests. He reassured investors that the US government was going ahead with plans to resolve the mortgage crisis, shoring up Fannie Mae and Freddie Mac, the state-sponsored mortgage providers. However, a wobble in US banking shares later in the week took some of the shine of the greenback’s advance. In a busy data calendar, this week’s key data is due on Thursday, with the Q2 GDP release, and Friday, with July unemployment and non-farms payrolls figures.
EU Data
- Thursday 10.00am Eurozone Unemployment for June. Previous 7.2%
- Thursday 10.00am HICP (Flash Estimate) for July. Previous 4.0%y/y
- Friday 9.00am Manufacturing PMI for July. Previous 49.2 index
The Euro lost ground against Sterling and the Dollar last week, as corporate sentiment and economic growth prospects collapsed across the 15-country bloc. German business sentiment deteriorated more than expected in July, hitting its lowest level in nearly three years, suggesting an economic upswing in Europe’s largest economy is ending. Meanwhile, Eurozone PMI revealed services and manufacturing activity shrank at a faster pace in July and businesses see little respite in sight, with optimism at its lowest level since the series began. This week’s main focus will be on Thursday’s July Eurozone flash HICP number, with the ECB resigned to being well above target inflation this year.
Interest rate outlook
| Country |
Current rate |
Last change |
Date of change |
Next meeting |
| UK (MPC) |
5.00% |
-25bps |
10/04/08 |
7th August |
| US (FED) |
2.00% |
-25bps |
30/04/08 |
5th August |
| EU (ECB) |
4.25% |
+25bps |
03/07/08 |
4th September |