Market Movers
In the UK, we believe CPI inflation increased to 0.1% y/y in July from 0.0% y/y in June. We think that core CPI inflation increased to 0.9% y/y in July from 0.8% in June. The Bank of England's focus appears to have shifted back to inflation in the wake of lower oil prices and stronger sterling (see FX Strategy: EUR/GBP - near-term support as low inflation postpones BoE hike ). We expect CPI inflation to stay very low for the rest of the year and then pick up in January but the lower oil prices and strong sterling imply that the pickup will be smaller than previously anticipated. As the BoE wants to see CPI inflation stabilise/move higher before hiking, we now expect it to deliver the first hike in Q1 16, most likely in February (previously November 2015).
In the US, we expect housing starts to continue the upward trend in July but at a more moderate pace. We expect building permits to give back some of the strong increase over the past two months in July. The recent surge has been driven by the volatile multifamily component and looks overdone.
In Sweden, household consumption data is due.
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