Newsletter – 14th August 2019

Morning Bulletin

Yesterday

  • The UK’s average earnings index jumped to 3.7% (Including Bonuses) yesterday for the three months to June. Measured on an annual basis June’s print is the highest rate since 2008 and rose from 3.5% last month. Worth noting with bonuses stripped out pay growth was in fact 3.9%.
  • The number of those claiming unemployment related benefits in the UK also fell in July, with 28,000 claims which was considerably less than the 42,000 expected.
  • The one slight negative yesterday saw the overall UK Unemployment Rate rise to 3.9% from a prior 3.8%, however the UK still has a record 32.811 million people currently in work.
  • None of the above however did anything to help the ailing Pound, with Sterling largely unmoved on the day against the Euro and US Dollar.
  • Economic Sentiment nose dived even further amongst German investors and analysts according to the latest ZEW reading. The index collapsed by just shy of 20 point to negative 44.1. That is the lowest level since December 2011 and far worse than the -21.7 expected. The reading however does appear to tally with the thoughts of many that the German economy could contract in Q2.
  • US Consumer Price Index +0.3% as expected in July.
  • US President Trump has decided to delay further tariffs on Chinese products that were due to come into force next month. A 10% tariff was set to be imposed on products including laptops and cell phones. According to Trump the tariffs have been delayed so they won’t be relevant to the Christmas shopping season and as such doesn’t impact US consumers.
  • The reaction in FX markets saw the likes of the Chinese Yuan and Aussie Dollar strengthen aggressively, whilst the Japanese Yen, the traditional safe haven currency was hammered.
Overnight

  • Japan Core Machinery Orders m/m 13.9% (-1.0% Exp)
  • Australia Wage Price Index q/q 0.6% (0.5% Exp)
  • China Industrial Production y/y 4.8% (6.0% Exp) – This is a 17 year low.
  • German Prelim GDP q/q -0.1% as expected
  • According to the Telegraph the speaker of the commons, John Bercow, has said Boris Johnson won’t be able to suspend Parliament to force through a no-deal exit, and that it is still possible for MP’s to prevent a no-deal Brexit in October.
Today
  • UK Inflation data headlines at 9.30am this morning.
  • Eurozone Flash GDP Q2 data for will also be closely watched at 10.00am.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.0787 +0.14
GBP/USD 1.2059 +0.01
EUR/USD 1.1178 +0.07
AUD/USD 0.6778 -0.25

 

Time (GMT) Region Data Release Forecast Previous
09.30 GBP CPI y/y 1.9% 2.0%
09.30 GBP PPI Input m/m 0.6% -1.4%
10.00 EUR Eurozone Flash GDP q/q 0.2% 0.2%
10.00 EUR Eurozone Industrial Production m/m -1.4% 0.9%
13.30 USD Import Prices m/m 0.0% -0.9%