Last week saw President Trump attempt once more to pass a repeal of Obamacare through Congress. Trump proposed an updated bill which would leave most of the Affordable Care Act in place, but remove its requirement that individuals buy coverage. Trump’s efforts were shattered after Senator John McCain joined two of his colleagues in voting against the most recent bill. Majority Leader Mitch McConnell stated that “it’s time to move on” after the bill was defeated by 49-51, falling short of the 50 votes to advance.
The US advance GDP figure for the second quarter of the year posted slightly better than expected at 2.6% on Friday. The figure was almost double the posting for the first quarter of the year. The increase was attributed to positive contributions from personal consumption expenditure, non-residential fixed investment, exports and federal government spending. However, as the Employment Cost Index posting was worse than expected, the Dollar slid over the course of the afternoon.
North Korea tested an intercontinental ballistic missile on Friday, it is believed that if used most of the US would be within range to be hit. As a result, the US flew two supersonic B-B1 bombers over the Korean peninsula. US President Donald Trump and the Japanese Prime Minister, Shinzo Abe, have vowed to take ‘all necessary measures’ to protect their allies from North Korea. Trump also took to twitter to express his disappointment in China for not taking action on Kim Jong Un and his missile program.
There is a quiet start to the week with no high tier data released on the economic docket. The Eurozone will be releasing their Flash CPI estimate and Unemployment Rate. Across the pond, the US will release the Chicago PMI and Pending Home Sales.
On Tuesday, the Eurozone, UK and US will all release their Manufacturing PMI figures. The Eurozone will also release individual Final Manufacturing PMIs from some of their biggest economies; Germany, France, Italy and Spain. Germany will also be posting their Unemployment Change figure.
On Wednesday, the UK will release the UK Construction PMI figure expected at 54.2, the second of their PMI figures to be released this week. The focus will move to the US in the afternoon with the release of the ADP Non-Farm Employment change, expected to rise to 187k from 158k last month. The weekly Crude Oil Inventories will also be released.
Thursday is the biggest day of the week for Sterling. The first release will be the Services PMI, followed by the BOE official bank rate decision. The rate is not expected to change but the votes will be watched closely to see if any of the other MPC members will join the hawks. After this release, BOE Governor, Mark Carney, will be hosting a press conference. In the afternoon, the US will be releasing the Unemployment Claims and the ISM Non-Manufacturing PMI.
The focus will be on the US on Friday, with the release of the Average Hourly Earnings, Unemployment Rate and Non-Farm Employment Change. Unemployment Rate is expected to remain at 6.5%, whilst the Average Hourly Earnings is expected to grow to 0.3%. Non-Farm Payroll is forecast to drop from last month’s 222k to 183k.