Pound continues to fall after Carney speech
- AUD Cash Rate: 1.75%
- AUD RBA Rate Statement
- GBP Services PMI: 52.3
- GBP BoE Financial Stability Report
- GBP BoE Gov Carney Speaks
- USD Factory Orders m/m: -1.0%
- NZD GDT Price Index: -0.4%
- USD FOMC Member Dudley Speaks
The Pound continued to struggle in the aftermath of the referendum, with the UK’s services PMI missing expectations. The figure registered at 52.3 against the forecast figure of 53.1. Growth over the second quarter was the slowest since Q1 2013 and growth of the UK service sector weakened in June, matching the 38-month low recorded in April. However, the markets’ primary focus was the Bank of England’s Financial Stability Report and Mark Carney’s press conference, which followed. The Bank of England has freed up an additional £150bn for lending by reducing the amount of capital that banks are required to hold in reserve. More importantly, Carney accepted that despite their best efforts, the BoE will not be able offset volatility that is to be expected, with the UK entering “a period of uncertainty and significant adjustment”. Referencing his warnings from March, today Carney said that “some of those risks have begun to crystallise”. As a result, Sterling fell by 2%, to the lowest level since 1985 – $1.30.
- German Factory Orders
- ECB President Draghi Speaks
- CAD Trade Balance
- USD Trade Balance
- USD ISM Non-Manufacturing PMI
- USD FOMC Meeting Minutes
The focus of the morning will undoubtedly revolve around the speech given by the ECB President, Mario Draghi, at the 8th ECB Statistics Conference, in Frankfurt at 9:00am. In the latter half of the day, the U.S. economy takes centre-stage. At 3:00pm the ISM Non-Manufacturing PMI number is being released, which is expected to beat last month’s figure of 52.9, forecast at 53.3. Any number above 50.0 indicates industry expansion, below indicates contraction. At 7:00pm the Fed Minutes will be released with their domestic economy being discussed. The poor June employment report will most likely be mentioned and markets will look to see whether this deterioration is temporary. The markets will be looking for evidence on conditions that would trigger a rate increase.