Halo Financial Team
Halo Financial
Today's Highlights
Mortgage approvals rise in the UK
Weaker inflation data may weigh on the euro
Strong economic sentiment is supporting the dollar
FX Market Overview
It was a quiet day on the foreign exchanges yesterday with very little macro data for the markets to get their teeth into. In the Uk It was reported that mortgage approvals had picked up as they rose to a 4 month high of just above 67,000. This spike is despite the implementation of tighter lending policies from high street banks as the Bank of England attempts to cool the rampant housing market. It remains to be seen if this is simply a spike or if policy makers will have to do more to help ease back price rises. The Pound suffered a little but that was mainly down to dollar strength rather than Sterling weakness.
The early highlight today will be on inflation data from the Eurozone. There has been an element of volatility in German inflation readings in May and June but the underlying picture remains stable. Lower energy inflation should drag the July HICP down from 1% last month which should lead to confirmation of a further slowing in the wider Eurozone inflation data tomorrow. The ECB may not be forced to react immediately as they probably still have time on their hands. They will want to see the impact of the June easing measures before their next move. Nonetheless a softer reading will certainly weigh on the euro which is already below 1.3400 this morning.
The US$ has continued to strengthen overnight after a strong trading session yesterday and this theme should continue. Important Data from the US today should show an increase of 265,000 jobs from the ADP and solid annual growth figures of around 3.0%. This should keep the dollar nice and perky ahead of the interest rate decision this evening which is unlikely to bring any surprises( a further $10bln reduction in stimulus is priced in). Fridays Non-Farm payrolls will be very closely watched and another solid release above 200k should keep the dollar bulls happy.
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