Sunday 4 December 2016

Markets daily top three for the weekend

Rachel Barden

Published 12/08/2016 | 11:20

Photo: Joe Giddens/PA Wire
Photo: Joe Giddens/PA Wire

Here's what's happening in the markets at a glance.

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Sterling remains under pressure - German GDP exceeds expectations

Yesterday, Eurozone inflation data was in line with expectations. Further support for the euro came from reports that Greek banks had reduced their exposure to the Emergency Liquidity Assistance (ELA) provided by the European Central Bank (ECB) by 5.4% in July. EURGBP reached 0.8623, just shy of the post Brexit high of 0.8625, levels that prior to the EU vote hadn’t traded in almost 3 years. EURGBP moved back above 0.86 following stronger than expected German GDP numbers this morning, coming in at +0.4% quarter on quarter and +3.1% year on year, versus +0.2% and +1.5% respectively. Q1 GDP was also revised upwards, to 1.5% from 1.3%.

U.S. Retail sales to pave the way for further hikes?

With a lack of US data releases this week, confusion about the Fed's rate-hike action has been the main driver for the US Dollar. Today we have July’s US Retail Sales report and August’s preliminary University of Michigan consumer confidence reading. Receipts growth is expected to slow (0.4 percent vs. 0.6 percent prior) while sentiment firms (91.5 vs. 90.0 prior). Better than expected growth in retail sales, combined with last weeks jobs report, would help confirm the underlying health of the US economic recovery. Non-voter San Francisco Fed President John Williams expressed his view that the central bank should hike rates again before the end of the year, citing the recent non farm payrolls and the employment-to-population ratio moving towards his view of full employment – which is one of the Fed’s targets as a central bank. Additionally the US wage and price inflation data has been trending in a positive direction, with the latter beginning to stabilise around 1.6%.

Commodity currencies rally on oil prices moves

Oil was a strong mover yesterday, with WTI futures up over 4% yesterday driven by comments from the Saudi Energy Minister. He mentioned that discussions between OPEC and non-OPEC members at a meeting next month may result in action to stabilise the market.

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