FOMC Rate Decision at 7.15pm BST
The political activities taking place in Japan took centre stage yesterday and as a result the US dollar was weaker overall. In Japan as reported yesterday, PM Koizumi has called for elections to be held on September 11th.
The yen initially weakened on the news, but regained some of its losses later in the day. This renewed interest in the yen showed that the market was pricing in the potential for Koizumi to fail and, now that the uncertainty is over, the focus can return to Japanese fundamentals, which are positive for the yen.
In the UK The Office for National Statistics said producer input prices rose a seasonally adjusted 1.8 percent last month, against analysts' expectations for a rise of 1.5 percent on the month. That took the annual rate to 13.4 percent.
Factory gate price data showed manufacturers were beginning to pass on their increased costs to customers, with output prices rising 0.7 percent in July.
Also dominating the headlines this morning is the news that crude oil continues to rise and has hit another new record high of $63/barrel. A number of factors are responsible for this surge, mainly security concerns in the Middle East.
Due to a “credible” threat, the US embassy in Saudi Arabia was closed and additionally, Iran’s rejection of nuclear proposals by the EU has brought concern over OPEC’s two biggest producers of oil. Output has also been reduced due to a number of energy companies shutting down refineries in order to perform necessary maintenance.
As far as economic data goes today we have already had the release of the British Retail Consortium (BRC) sales monitor for July, retailers were delivered a fresh blow when figures showed the high street suffered its worst July in a decade. Like-for-like sales were 1.9% lower than last year as seasonal sales failed to kick-start trading. The outcome was far worse than the 0.5% drop many economists had predicted and led the BRC to call for further interest rate cuts aimed at reviving consumer confidence.
In Germany we have Trade Balance figures for June out at 8.00 am BST, this is not expected to exceed the May level of EUR 12 billion. Finally in the UK at 9.30 BST we have Trade in goods and service data for June, it is expected that exports should have improved in June and that there will be a small improvement in the figure.
We have a number of economic releases in the US today, at 1.30 pm BST we have the Non-farm Productivity (Q2-prelim), at 3.00 pm BST, the Wholesale Inventories for June at 7.15 pm BST, this figure is expected to come out flat. Most importantly all eyes will be on the FOMC rate decision. It is widely predicted that once again the Fed will increase interest rates by 25bp to 3.5%, this could trigger modest dollar gains. It is predicted that traders will be reluctant in sustaining any strengthening in the dollar due to the impending trade deficit report due out on Friday.
The yen initially weakened on the news, but regained some of its losses later in the day. This renewed interest in the yen showed that the market was pricing in the potential for Koizumi to fail and, now that the uncertainty is over, the focus can return to Japanese fundamentals, which are positive for the yen.
In the UK The Office for National Statistics said producer input prices rose a seasonally adjusted 1.8 percent last month, against analysts' expectations for a rise of 1.5 percent on the month. That took the annual rate to 13.4 percent.
Factory gate price data showed manufacturers were beginning to pass on their increased costs to customers, with output prices rising 0.7 percent in July.
Also dominating the headlines this morning is the news that crude oil continues to rise and has hit another new record high of $63/barrel. A number of factors are responsible for this surge, mainly security concerns in the Middle East.
Due to a “credible” threat, the US embassy in Saudi Arabia was closed and additionally, Iran’s rejection of nuclear proposals by the EU has brought concern over OPEC’s two biggest producers of oil. Output has also been reduced due to a number of energy companies shutting down refineries in order to perform necessary maintenance.
As far as economic data goes today we have already had the release of the British Retail Consortium (BRC) sales monitor for July, retailers were delivered a fresh blow when figures showed the high street suffered its worst July in a decade. Like-for-like sales were 1.9% lower than last year as seasonal sales failed to kick-start trading. The outcome was far worse than the 0.5% drop many economists had predicted and led the BRC to call for further interest rate cuts aimed at reviving consumer confidence.
In Germany we have Trade Balance figures for June out at 8.00 am BST, this is not expected to exceed the May level of EUR 12 billion. Finally in the UK at 9.30 BST we have Trade in goods and service data for June, it is expected that exports should have improved in June and that there will be a small improvement in the figure.
We have a number of economic releases in the US today, at 1.30 pm BST we have the Non-farm Productivity (Q2-prelim), at 3.00 pm BST, the Wholesale Inventories for June at 7.15 pm BST, this figure is expected to come out flat. Most importantly all eyes will be on the FOMC rate decision. It is widely predicted that once again the Fed will increase interest rates by 25bp to 3.5%, this could trigger modest dollar gains. It is predicted that traders will be reluctant in sustaining any strengthening in the dollar due to the impending trade deficit report due out on Friday.
posted by Drs Search @ 11:30 AM
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