Share This Story
Commentary on economic data in the week - Busy week could test bond market nervesBusy week could test bond market nerves
â€¢ Data highlights this week are the release of the August labour market report and core PCE deflator for July in the US.
â€¢ Although the ECB is unlikely to raise interest rates, the press conference on Thursday will still attract strong market interest.
â€¢ A relatively quiet week for UK releases is headed up by BoE lending data for July on Wednesday and August GFK consumer confidence on Thursday.
Financial market attenton will be firmly focused on the US this week, with a series of key releases due and headed up by the volatile labour market report for August on Friday. The future direction of official US interest rates remains one of the main drivers of currency and interest rate markets and they will be keenly looking for any clues from the data. The publication on Tuesday of the minutes of the August FOMC meeting, where the Fed left interest rates on hold (at 5.25%), the first time since June 2004 they have not been raised at an FOMC meeting, should provide a steer to thinking on the committee at that time. We already know that the decision was not unanimous, with Lacker favouring a hike to 5.5% in August. There are speeches from Fed members throughout the week, including two from chairman Bernanke, on Thursday and Friday, which should advise their current assessment. Looking more closely at main US data out this week: non-farm payrolls have fallen short of analyst forecasts in recent months but they may now be underestimating the underlying strength of the US economy. The average number of jobs created in 2006 is around 140,000 and we look for a number around this level in August. The second estimate of Q2 gdp growth, on Wednesday, is expected to show a modest upward revision after coming in weaker than expected last month. On Thursday, we have the latest release of Fed's preferred inflation measure, the core PCE deflator. Another monthly rise of 0.2% would take the annual rate to 2.5% for July, the highest rate April 1995. August consumer confidence, on Tuesday, may disappoint after a sharp fall in the University of Michigan survey last week.
A change in euro zone interest rates is strongly unlikely this week. The ECB raised interest rates to 3% earlier this month and we believe that they may now wait until the October meeting before hiking again. However, the press conference should still provide some valuable information about the future timing and direction of interest rates as well as updated quarterly growth and inflation forecasts. The key data this week for the euro zone are the flash estimate of August CPI on Thursday, where we expect the annual rate to remain at 2.4%, and the second estimate of Q2 gdp, where again we expect no change from 0.9% q/q and 2.4% y/y last month. There are a raft of survey data out this week, the most important of which will be the manufacturing PMI releases.
It is a relatively quiet week for UK indicators. On Wednesday, BoE lending data for July should show robust mortgage lending but approvals may disappoint after a sharp fall in the BBA numbers for July. Consumer credit is expected to remain weak. The CBI distributive trades' survey should show overall retailers saw higher sales in August, but the outturn may be weaker than in July. The GFK consumer confidence index may have steadied at -4 for a third successive month in August, however, there is the risk of a rise after some solid employment growth. The manufacturing PMI may have remained around 54 in August, still signalling output growth of around 2% pa.
10 Gresham Street,
London EC2V 7AE,
0207 050 - 6045
Any documentation, reports, correspondence or other material or information in whatever form be it electronic, textual or otherwise is based on sources believed to be reliable, however neither the Bank nor its directors, officers or employees warrant accuracy, completeness or otherwise, or accept responsibility for any error, omission or other inaccuracy, or for any consequences arising from any reliance upon such information. The facts and data contained are not, and should under no circumstances be treated as an offer or solicitation to offer, to buy or sell any product, nor are they intended to be a substitute for commercial judgement or professional or legal advice, and you should not act in reliance upon any of the facts and data contained, without first obtaining professional advice relevant to your circumstances. Expressions of opinion may be subject to change without notice. Although warrants and/or derivative instruments can be utilised for the management of investment risk, some of these products are unsuitable for many investors. The facts and data contained are therefore not intended for the use of private customers (as defined by the FSA Handbook) of Lloyds TSB Bank plc. Lloyds TSB Bank plc is authorised and regulated by the Financial Services Authority and is a signatory to the Banking Codes, and represents only the Scottish Widows and Lloyds TSB Marketing Group for life assurance, pension and investment business.
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."