Quiet start to the week but data releases due to flood in mid-week
Economic turmoil in Turkey towards the end of last week weighed heavily on the Euro as markets moved towards a more risk averse stance. The Dollar Index strengthened to its highest levels in over a year amid a potential emerging markets crisis, confirming the USD’s superiority as a safe haven over gold. As reported last week, concerns over the European bank’s exposure to Turkey has prompted the Euro to track the Lira’s decline against the Dollar, with the EUR/USD pairing falling to its lowest levels since July 2017.
Brexit fears over a “no deal” scenario continue to weigh heavily on the Pound. However, it is being reported that Theresa May is planning to make concessions on keeping key EU rules long after Brexit, in an effort to break the deadlock in negotiations. Markets will keep a watchful eye on the resumption of Brexit talks in Brussels this Thursday, with the Irish border issue currently posing the biggest obstacle to an orderly exit.
Today sees a very quiet start to the week with no economic releases.
Tuesday’s morning session will be dominated by UK Labour Data, headlined by Average Earnings expected to remain at 2.5%, matching last month’s figure. The UK Claimant Count Change will also be released along with the Unemployment Rate, which is expected to stay at 4.2%. The Eurozone will release Flash quarter on quarter GDP predicted at 0.3%. German ZEW Economic Sentiment is also due out, with the market predicting a reading of -20.1, slightly better than the previous -24.7. No high tier data out during the US session.
Inflation data out of the UK headlines the morning session with year on year CPI predicted to come in at 2.5%. This representing a small increase on the prior reading of 2.4%. The Retail Price Index is expected to remain at 3.4%. In the afternoon session, US Retail Sales are predicted to worsen to 0.2% which would be the lowest reading since March of this year. Core Retail Sales are expected to stay at 0.4%.
Thursday will be another quiet day data wise. In the morning session UK Retail Sales are expected to bounce back from last month’s poor reading of -0.5% to post a positive 0.2% increase. In the US session, New Building Permits are expected to post and increase from 1.29m to 1.31m and the Philly Fed Manufacturing Index is predicted to worsen slightly to 22.3 from 25.7.
There’s little data out to end the week with only the Eurozone final CPI due out in the morning session which is expected to match last month’s figure of 2.1%. The afternoon session’s only notable releases include Canadian CPI expected to come in at 0.1% month on month and the prelim UoM Consumer Sentiment predicted to increase slightly to 98.1 from 97.9.