Disappointing data puts rate hike on the back foot

• German Factory Orders m/m: -1.8%
• UK Halifax HPI m/m: -0.9%
• CAD Trade Balance: -2.5B
• US Trade Balance: -48.3B
• NZD GDT Price Index: 9.9%
• ECB President Draghi Speaks
• JPY Monetary Policy Statement

Yesterday was relatively light in terms of data, Sterling fought back slightly and posted gains against the Dollar and Euro as markets continue to speculate about central bank rate rise plans from the UK and US. The only data to note came from the Eurozone powerhouse; Germany. Factory orders unexpectedly dropped 1.8%, missing expectations and posting its worst reading in seven months. The poor reading highlights the Euro’s exposure to the Chinese slowdown as orders decreased substantially in the Eurozone’s largest economy.

Rate expectations slipped further and forecasts were put back after disappointing data from the US (non-farm payrolls) and UK (services PMI). Market expectations now point to no rate increase from the Bank of England until 2017 and the Federal Reserve holding until 2016, despite recent commentary from Fed members signalling an earlier rate rise. Data from the US and UK continues to be heavily scrutinised as economists’ attempt to decipher both economies rate rise plans. Today we have manufacturing production from the UK in the morning and US crude oil inventories later this afternoon.

• BoJ Press Conference
• UK Manufacturing Production m/m
• CAD Building Permits m/m
• UK NIESR GDP Estimate
• US Crude Oil Inventories
• JPY Core Machinery Orders m/m
• JPY Current Account

A light day in terms of data with the only high tier release scheduled at 09:30am from the UK. UK manufacturing production is forecast to bounce back from last month’s bearish -0.8% and expand by 0.5%. After last week’s poor manufacturing PMI this figure will be under the spotlight to see if the UK’s secondary sector can buck the trend.