Sterling boosted by M&A activity

Yesterday’s markets

9th September 2015

  • German Trade Balance: 22.8B
  • French Trade Balance: -3.3B
  • EUR Revised GDP q/q: 0.4%
  • UK 30-y Bond Auction: 2.45|1.4
  • AUD Westpac Consumer Sentiment: -5.6%
  • AUD Home Loans m/m: 0.3%
  • RBA Deputy Gov Lowe Speaks

Sterling continued its march against the majors despite  some poor data released early in the day. In the early hours of Tuesday the British Retail Consortium reported that spending stagnated last month as mixed weather and the later-than-usual date of a public holiday dampened sales of furniture, school clothing and equipment. The BRC said retail spending in August was just 0.1 percent higher than a year earlier, the smallest rise since April and down from 2.2 percent growth in July. This is an obvious concern for growth moving forward.

However, corporate activity gave Sterling a boost. The British Pound advanced against the US Dollar, posting the biggest two-day gain in almost three months as speculation that a Japanese company’s purchase of a U.K. insurer signals more inflows into Britain’s economy. Japanese MS&AD Insurance Group Holdings Inc. agreed to buy Lloyd’s of London insurer Amlin Plc for about £3.47 billion.

Meanwhile, news from Europe was positive as the second estimate of gross domestic product was revised slightly higher. In addition, it was announced that German imports and exports had both reached record levels. German exports were boosted by the continuing weakness of the Euro resulting in a rise of 2.4%.

Today’s markets

8th September 2015

  • UK Manufacturing Production m/m
  • UK Trade Balance
  • CAD Building Permits m/m
  • NZD Official Cash Rate
  • RBNZ Rate Statement 
  • AUD Employment Change
  • AUD Unemployment Rate
  • CNY CPI y/y

The day ahead has a some key data releases from both sides of the pond that will keep the market interested. From the UK, the manufacturing data and trade balance are due for release. Later in the day the National Institute of Economic and Social Research are due to release their GDP estimate based on the previous 3 months. Focusing on the US, there is another employment number that the market will be watching. The Job Openings and Labor Turnover Summary (JOLTS) focuses on the number of job openings during the reported month, excluding the farming industry.