Market Drivers for August 15 2014

Half of Europe on Bank holiday, markets quiet

UK GDP 2nd estimate in line at 0.8%

Nikkei 0.02% Europe 0.53%

Oil $95/bbl

Gold $1314/oz.

Europe and Asia:

GBP UK GDP 0.8% vs. 0.8%

North America:

USD PPI 08:30

CAD Employment 8:30

USD Empire 8:30

USD U of M 9:55

A very quiet night of trade as currency dealing winds up for the week with many of the key European centers out for bank holiday. The only report on the docket today in both Asia and Europe was the second revision of UK GDP which came in right in line at 0.8% versus 0.8% forecast.

The year over year figures were a tad bit better with growth coming in at 3.2% versus 3.1% initially eyed. This was the highest GDP reading since Q4 of 2007 and clearly showed that UK economy continues to vastly outperform the rest of the G7 universe. The growth was well distributed with services and manufacturing growing about 3.3% on year on year basis.

Cable popped on the news. clearing the 1.6700 barrier, but then faded a bit off the highs as enthusiasm waned. The GDP figures, though good will have little impact on UK monetary policy which is far more focused on wage growth. With wages still tepid, the BoE is not expected to move on rates any earlier than Q1 of 2015 and that has caused pound to sell off the recent highs as speculators adjust their time frame.

In North America today the calendar is a lot more active with PPI, Empire and U of M all on the docket. The currency markets will look at the U of M data carefully for any signs of improvement in consumer sentiment. US consumer remains cautious as evidenced by the muted Retail Sales numbers released earlier this week and any pick up in U of M readings could signal a better spend into the fall back to school season, That may provide USD/JPY with a lift towards the 103.00 figure.

Also in North American session the market will get a revision of Canadian employment data which apparently was released with errors last week. The report last week showed a much worse than expected labor data with only 0.2K jobs created versus estimates of 24K gain. Statistics Canada has noted that there was human error involved and if the revised numbers prove to be close to the original expectation the loonie could get a boost and trade towards 1.0850 as the day proceeds.

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