Yesterday we saw the UK’s current account balance fall to a two year low (3.6%) of GDP – this is a marked difference from last year when we saw the level sitting at an unacceptable 5.1% and this news will bring some relief to the BoE. On the other hand, consumer sentiment in the UK was seen to fall following concerns over China and the migration issues facing Europe which have affected the will to spend. Open opening yesterday, GBP initially gained against USD on the back of trade balance data but his dropped off as the day progressed. Against the EUR, the pound only managed to gain half a percent as the day progressed and closed. From the UK today is just manufacturing PMI data which is expected to show that this sector is still struggling somewhat. Other than that, eyes will be more on the US which has important data out.
In Europe, the negative inflation rate was seen to fall again with a yearly drop of 0.1%. This has been attributed to the oil and energy price drop last month. This is the first time a drop has occurred since the start of the year when the QE programme got going. On the other hand, core inflation is sitting pretty at 0.9%. Data out today for the Eurozone includes manufacturing PMI but will not have much (if any) impact on the euro’s strength.
From the US we saw a bit more data with meat in the form of ADP employment numbers which came in better that expected at 200K. Chicago’s PMI was seen to fall, however, missing the estimated 53.0 level by coming in at 48.7. Today we’ll see ISM manufacturing number which will give us more insight into the state of the manufacturing sector. Friday’s non-farm payrolls will be one to watch as well which will tie into the (good) ADP figure above.
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