Yesterday the market was quiet as the US celebrated Labor Day bank holiday. With the lower levels of liquidity we saw the British Pound advance for the first time in 10 days against the Dollar, ending its longest losing streak since 2008. The main driver was once again China and the optimism that stability may be returning to China’s stock market which in turn eased concern that the U.K. economic recovery will be derailed. The BoE meeting is later this week which will focus on the voting pattern and any rhetoric that is related to interest rates. Data of late has been questionable and the currency slumped last week after reports from manufacturing to services signaled a slowdown.
Meanwhile, the US Dollar lost ground yesterday as the market par it’s bets that the FOMC will raise rates this month and indeed next month as well. This comes after the disappointing Non Farms Payrolls on Friday and the continuing uncertainty surrounding the mini crisis in China.
Overnight 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.
Once again the economic docket is fairly quiet again today with the revised reading of Eurozone GDP the only figure to note.