US Data
Tuesday 6:00 S&P Case Shiller House Price Index (July) -15.4% y/y
Tuesday 7:00 Consumer Confidence (Sept) 54.1
Wednesday 5:15 ADP Employment Survey (Sept) -298k
Wednesday 5:30 GDP (Q2) -1.0% q/q
Wednesday 5:30 Chicago PMI (Sept) 50.0
Thursday 7:00 Pending Homes Sales (July) 3.2% m/m
Friday 5:30 Non-Farm Payrolls (Sept) -216k
Friday 5:30 Unemployment Rate (Sept) 9.7%
Friday 7:30 Factory Orders (Aug) 1.3% m/m
The Fed last week maintained its target range for the Fed Funds rate of 0.00% to 0.25%, in line with market expectations. There had been some speculation ahead of the meeting that the Fed
would begin to remove some of the monetary stimulus. However, the central bank left the stimulus in place with the only notable change being an extension from year end to Q1 2010 to purchase
Agency and Mortgage Backed Securities. Other notable data releases were Augusts' existing homes sales which declined by 2.7% the first such decline in 4 months and the new homes sales also
for August which fell by 1%. This week the non farm payroll release is the major focus with the market looking for a decline of just 190k jobs.
UK Data
Monday 1:30 Nationwide House Prices (Sept) -2.7% y/y
Tuesday 1:30 BoE Mortgage Approvals (Aug) 50.1k
Tuesday 1:30 Current Account (Q2) -GBP8.5bn
Tuesday 1:30 GDP (Q2) -0.7% q/q
Tuesday 3:00 CBI Distributive Trades Survey (Sept) -16.0
Tuesday 16:01 GFK Consumer Confidence Survey (Sept) 25.0
Thursday 1:30 Manufacturing PMI (Sept) 49.7
For the second week running it was the Bank of England who acted as a catalyst to send sterling lower on the foreign exchange markets. The obvious pressure point threatened to be the release of the minutes of this month’s MPC meeting on Wednesday but on Monday markets reacted to a Bank of England quarterly bulletin containing a scholarly article dissecting the reasons for Sterling’s decline during the credit crunch. The release of the minutes on Wednesday actually helped sterling temporarily by failing to mention the idea of cutting the rates paid on commercial bank reserves with the BoE – the catalyst for sterling negativity the previous week. But on Thursday morning a regional newspaper in the north-east, The Journal, published an interview with Mervyn King who, in addition to sounding cautious on the prospects for economic recovery said that the UK needed to shift resources to the export industries and commented that “the fall in the exchange rate that we have seen will be helpful to that process”. This week we look to the mortgage approvals and GDP releases be the major event risk for the week.
Canada Data
Monday 5:30 BoC Carney speaks to the Victoria Chamber of Commerce
Wednesday 5:30 GDP (July) 0.1% m/m
Wednesday 5:30 Industrial Product Price Index (Aug) -0.5% m/m
Wednesday 5:30 Raw Materials Price Index (Aug) -3.8% m/m
The lone data release last week spooked the market as a below consensus reading of -0.6% in retail sales continued to highlight the consumer general reluctance to part with their hard earned money. Consumers remain at the core of any recovery and until they grow in confidence any potential domestic recovery will struggle to gain traction. The larger theme at hand however was the talk of global central banks beginning to pare back the amount of stimulus they were injecting into the market. This was a signal that they believe the global economy has sufficient strength to stand on its own two feet and the absence of continued central bank assistance would not result in an economic collapse. This week GDP will be the primary focus with analysts hoping to see continued growth regardless of how minor that growth may be.
Euro Zone Data
Tuesday 2:00 Consumer Sentiment (Sept) -22.0
Wednesday 2:00 HICP - Flash Estimate (Sept) -0.2% y/y
Thursday 1:00 Manufacturing PMI (Sept) 49.0
Thursday 2:00 Unemployment Rate (Aug) 9.5%
Friday 2:00 PPI (Aug) -0.8% m/m
European officials have appeared surprisingly relaxed about the potential threat to an export led economic recovery, via a strengthening domestic currency, perhaps because they have had more pressing issues higher up the agenda. However, the French finally woke up to this danger with Reuters reporting that an unnamed official had flagged this issue as leaders gathered in Pittsburgh ahead of the G20 summit at the weekend. As we know, G20 leaders seemed collectively more concerned with a rather different threat from Iran and banker’s bonuses, rather than currency issues.