Friday was a busy day on the economic data front. First up, we saw figures released showing that the Eurozone economy expanded in the second quarter at the fastest pace in nearly four-years. The Euro-Zone's seasonally adjusted preliminary second quarter GDP showed an expansion of 1.0%, compared with the previous 0.2% and the expected 0.7%. The biggest jump in the figures came from Germany's GDP, with a preliminary reading of Q2 GDP showing extremely robust 2.2% q/q growth, well above expectations of 1.3%. This was the fastest pace of growth in nearly 20 years since German reunification. Global demand and a weaker Euro helped boost exports during the period, sustaining growth in the area.
Whilst the UK can take comfort from the fact that they can control their own currency, there are still issues. House prices in the UK have taken a bit of a knock for the month of July according to figures posted by Rightmove, the property website. The figures reflect that people wanting to sell their homes are having to cut prices faster than at any time this year following a flood of properties hitting the market. On a national basis house prices have come in by 1.7% from July to August. Following the Bank of England cutting its growth forecast on Wednesday and raising its estimate of inflation this housing data has not helped the continued fear around the risk of a double dip recession.
This week's economic calendar starts with today's Eurozone's CPI inflation data for July with a market expectation for 1.7% year on year. This is a heavy week for UK data starting with July's CPI, due on Tuesday, expected to moderate again to +3.1% year on year versus previous month's +3.2%. On Wednesday, the minutes from the August 5th MPC meeting are due, with weekend press speculation suggesting the possibility of a three-way-split in how the votes were cast. We expect MPC Member Sentance to remain a lone voice in calling for a rate hike. After the recent weakness in house price and consumer confidence, retail sales due on Thursday will be a useful barometer of whether consumer spending has been affected by headlines warning of imminent and severe fiscal consolidation. Out from the US this week, starts with tomorrow's July's housing starts and industrial production. This is then followed on Thursday by weekly initial jobless claims and two indices of manufacturing activity.
report by James Lesinski
Tel: 0845 130 8148 | Email: london@currenciesdirect.com | www.currenciesdirect.com
Back