From the UK last week we saw a mixed bag of ups and down as events elsewhere had more of an effect on Sterling than anything domestically. What we did see was news that UK banks had passed their stress testing processes. On the other hand, there was some warning issued that if GBP stays too strong then there might be a knock-on for the inflation rate, while manufacturing and construction PMI both came in below forecast. Services PMI seemed the only data of note to come in above estimates last week.
Things this week might be more exciting as we see Mark Carney give testimony before the Parliamentary Committee in Brussels later today. We’ll see manufacturing production (monthly) out tomorrow which is anticipated to come in a bit weak (-0.1% versus 0.8% previously), while on Thursday we’ll see MPC meeting minutes from their last get-together.
Last week was better for the single currency as we saw EUR post fresh four week highs against the dollar as it had been lingering around 8 month lows versus the Greenback. Germany didn’t fare so well as its retail sales dipped for the 3rd month in row as a result of low levels of aggregate demand. Overall, things are looking a bit better as we saw EUR strengthen on the back of Draghi’s additional QE stimulus (albeit not by much and for only 7 months longer than had been initially planned).
This week will be quite quiet for Europe –all we’ll really see is LTRO numbers at the end of the week. Other than that, we’ll see speculation rife regarding ECB monetary policy going forward.
Across the Atlantic, the dollar bull-run seemed to slowdown, despite a good run of data including positive ISM manufacturing and an increase in non-farm payrolls of 211K people. Fed chair, Janet Yellen did, however, state that if the rates aren’t seen to rise this month then we could see States then having to ‘play catch-up’ with other majors.
Everything seems like its gearing up to an interest rate rise on 16 December, and any positivity seen in data out this week, including jobless claims data, monthly PPI, monthly retail sales and consumer sentiment from Michigan.
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