Newsletter – 31st July 2017

Morning Bulletin


  • Friday kicked off with solid Inflation prints from two of the Eurozone’s biggest member states. German Inflation rose 0.4% during the month of July (0.2% Exp), whilst Spanish year on year Inflation was inline with expectations at 1.5%.
  • Spanish 2nd Quarter GDP also impressed with a print of 0.9%, representing the highest level of q/q growth in over 2 years.
  • Speaking Friday UK Chancellor Hammond said the UK will have a three year transition period with the EU at most, and that the UK would leave the customs union and single market, but an exit needed to be steady to avoid any potential cliff edge scenario.
  • Canadian GDP data for the month of May smashed expectations of modest growth of +0.2%. Instead the actual reading of +0.6% was the joint-highest monthly print since September 2008. The CAD Dollar surged in FX space, and this continuing improvement in the economy could put pressure on the Bank of Canada to hike rates once again this year.
  • The recent US Dollar slump showed no signs of abating Friday afternoon despite an encouraging GDP figure. The Advance GDP print showed the economy grew at an annualised rate of 2.6% during the second quarter, beating the expected 2.5%.
  • That however was not enough to prevent the US Dollar Index declining, with EUR/USD pushing back into the Mid 1.1700’s and GBP/USD surging to a day’s high of 1.3151.
  • According to the IMF the US Dollar real effective exchange rate is overvalued by 10-20% when compared to US medium term fundamentals.
Over The Weekend

  • The Euro is slightly on the back-foot this morning following dovish comments from ECB member Lautenshlaeger. Speaking over the weekend she said a stable inflation trend towards the ECB’s 2% target was an important factor when considering tightening monetary policy, but added that ‘it was not quite there yet’.
  • Chinese Manufacturing PMI 51.4 (51.5 Exp)
  • Chinese Non-Manufacturing PMI 54.5 (54.9 Previous)
  • New Zealand ANZ Business Confidence 19.4 (24.8 Previous)
  • German Retail Sales m/m 1.1% (0.1% Exp)
  • Fair amount of data due for release for a Monday.
  • Today’s key print will be the Eurozone Flash CPI estimate due at 10am, with a print of 1.3% y/y expected.


Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1190 +0.19
GBP/USD 1.3120 -0.08
EUR/USD 1.1724 -0.21
AUD/USD 0.7974 -0.17


Time (GMT) Region Data Release Forecast Previous
9.00 EUR Italian Monthly Unemployment Rate 11.2% 11.3%
09.30 GBP Net Lending to Individuals m/m 4.9Bn 5.3Bn
10.00 EUR CPI Flash Estimate y/y 1.3% 1.3%
10.00 EUR Eurozone Unemployment Rate 9.2% 9.3%
13.30 CAD RMPI m/m -3.2% -1.8%
14.45 USD Chicago PMI 60.8 65.7
15.00 USD Pending Home Sales m/m 0.9% -0.8%