Market Movers
Today’s calendar of economic data releases is relatively thin. In the euro area we expect a drop in July consumer confidence.
In the UK, we expect a small decline in retail sales from May to June. One should not put too much weight on this as retail sales are very volatile from month to month. The quarterly growth should still indicate a rebound in private consumption in Q2.
The Central Bank of Turkey will release an interest rate decision today. We expect the bank to keep rates unchanged, which is a consensus call.
In North America, we get US initial jobless claims and Canadian retail sales.
Selected Market News
Early this morning the Greek parliament passed the key reform measures (230 in favour versus 63 against) that are required to start negotiations on the new EUR86bn bailout with the Greek creditors later this week.
Meanwhile unconfirmed media reports state that the ECB has decided to raise the Emergency Liquidity Assistance to Greek banks by EUR900m for the second time in a week, see WSJ. The ECB has refused to comment.
In FX markets, the GBP has overnight lost some of the gains stemming from yesterday’s release of the Bank of England minutes revealing a hawkish stance of ‘some’ members (see UK – More MPC members tilt towards a hike, 22 July). In our view, the GBP will remain vulnerable today should our call for a small drop in retail sales materialise.
Meanwhile news of an unexpected increase in US crude oil supplies sent the oil price lower, which weighs on the traditional oil exporting currencies.
Yesterday the Reserve Bank of New Zealand cut the cash rate by 25bp for the second time in six weeks. While Governor Wheeler stated that ‘further easing seems likely’, he noteworthy omitted prior comments on the NZD being fundamentally overvalued On the back of the recent weak ‘kiwi’ economic data pulse more than a full 25bp cut had been priced in financial markets. The NZD has strengthened on the announcement – a move likely amplified by the historically stretched short speculative NZD-positioning (see IMM Positioning, 21 July).
Scandi Markets
In Denmark, we expect July consumer confidence to decline to 9.0 from 9.8 on the back of weaker key figures, the uncertainty from Greece and the volatile interest rates.
In Sweden, we expect June unemployment to rise to 9.2%.
