Review of European session: the pound rose significantly



Were published the following data:

(time/country/index/period/previous value/forecast)

06:00 UK Index of house prices Nationwide (m/m Aug 0.5% -0.3% 0.6%

06:00 UK Index of housing prices from the Nationwide, y/y August 5.2% 4.8% 5.6%

06:00 Germany Retail sales, seasonally adjusted July -0.6% Revised from -0.1% 0.5% 1.7%

06:00 Germany Retail sales (seasonally adjusted, yoy Jul 2.3% Revised from 2.7% 0.3% -1.5%

06:00 Switzerland Indicator of consumer activity from UBS Jul 1.34 1.32

07:55 Germany unemployment rate, seasonally adjusted Aug 6.1% 6.1% 6.1%

07:55 Germany unemployment Change August was Revised from -8 -5 -7 -7

09:00 Eurozone unemployment rate July 10.1% 10.0% 10.1%

09:00 Eurozone consumer price Index, y/y (preliminary) August 0.2% 0.3% 0.2%

09:00 Eurozone consumer price Index, the base value, y/y (preliminary) August 0.9% 0.9% 0.8%


The pound is growing strongly on data showing that the UK economy is going through a good period after the referendum on leaving the EU. According to a report by financial services company Nationwide, housing prices in the country are stable. The survey, conducted by GfK, showed improvement of consumer sentiment. These data allow investors to fix profit on short positions on the pound opened after a referendum.

In the UK, housing prices increased at the fastest pace in five months in August, said Wednesday the Nationwide Building Society. Housing prices rose 5.6 percent year-on-year in August, after rising 5.2 percent in July. It was the fastest growth over the past five months. Economists had forecast that annual growth will slow to 4.8 percent. On a monthly basis, housing prices unexpectedly rose by 0.6 percent, slightly faster than the growth of 0.5 percent a month ago. Prices as expected to decline by 0.3 percent.

New buyer inquiries were softened through the imposition of additional duties on the secondary market in April and the uncertainty around the referendum of the EU, said Robert Gardner, chief economist at Nationwide. “What will happen on the demand side will be determined, to a large extent, the prospects of the labor market and confidence among potential buyers,” says Gardner.

At the same time, consumer confidence UK GfK Group in August dropped to -7, while analysts expected a decline to -8. Despite the decrease, the index in August was better value July, when the indicator dropped to -12. Consumer confidence remains weaker than it was before the vote on June 23, when the index was -1. The consumer confidence index from the GfK Group is a leading indicator reflecting the level of consumer confidence in economic activity. Presented indicator is based on a survey of 2,000 people, conducted from 1-16 August. The improvement in consumer confidence is affected by high employment and income growth in the UK, as well as the trust contributed to the good weather in recent months.

EUR/USD declines amid large-scale strengthening of the American currency on expectations of interest rate hike by the fed. Support for the dollar have the recent comments of fed officials that strengthened the probability of a rate hike. Last Friday, the fed Chairman Yellen said to increase base rates have risen in recent months due to the improved situation on the labour market and expectations of stable economic growth. However, she did not specify when the fed intends to act, stating that a rate hike will be data dependent.

However, yesterday the Deputy head of the fed, Fisher also reiterated that the pace of rate hikes will depend solely on the situation in the economy. “I don’t think at the time when we start to raise rates, we’ll know whether it’s a single promotion or multiple. It completely depends on what will happen in the economy,” Fisher said.

According to the futures market, the probability of a rate hike in September is 24%. Meanwhile, the chances of increase in rates in December is now estimated at 52.5%.

The pressure on the single currency also had a slightly has not held on to forecasts of inflation and unemployment in the Eurozone. Eurozone inflation remained stable in August, showed on Wednesday preliminary estimates from Eurostat. Inflation remained unchanged at 0.2 percent in August, while economists had expected the index to rise marginally to 0.3 percent. Inflation remains below the target level of the European Central Bank “below but close to 2 percent’ since the beginning of 2013.

Core inflation, which excludes energy, food, alcohol and tobacco) declined slightly to 0.8 percent from 0.9 percent in July. Core inflation was expected to remain at 0.9 percent.

Energy prices in August fell by 5.7%. Prices for food, alcohol and tobacco rose 1.3 percent, and the cost of services rose 1.1 percent. The prices of non-energy industrial goods rose only 0.3 percent.

In turn, the unemployment rate in the Euro area remained unchanged at the lowest level since July 2011, announced on Wednesday by Eurostat. The unemployment rate remained stable at 10.1 percent in July. Economists had forecast that figure drops to 10 percent. The number of unemployed fell by 43 000 in June to 16,307 million Since last year, unemployment decreased by 1,034 million

Unemployment among young people amounted to 21.1 percent, the same as in June. The unemployment rate in the EU-28 amounted to 8.6 percent in July, remaining unchanged from June. It was the lowest since March 2009.


EUR/USD: during European session the pair fell to $1.1128

GBP/USD: during European session the pair rose to $1.3156

USD/JPY: during the European session, the pair rose to Y103.33

At 12:15 GMT United States will present the changes in the number employed by ADP in August. At 12:30 GMT Canada will release the GDP for June and Q2. In the US at 13:45 GMT will be released the index of purchasing managers in Chicago for August at 14:00 GMT pending home sales for July at 14:30 GMT – the change in oil reserves according to the Ministry of energy. At 23:50 GMT Japan will release the change in the volume of capital expenses for June.




Review of European session: the pound rose significantly 31.08.2016

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