The Pound closed down last week after a slew of economic data showed that activity slowed in September in 2 out of the 3 main sectors, fueling a sell off in the British Pound.
Growth in the manufacturing and construction sectors dropped in September whereas the Services industry grew ever so slightly. The UK economy is heavily reliant on services as it makes up a major part of the economy and underlying GDP growth.
UK manufacturing dropped in September to 55.9 from 56.9 in August and the construction sector contracted with a reading of 48.1 in September from 51.1 in August. Services grew slightly with a print of 53.6.
Data for the UK this week includes a speech from Prime Minister Theresa May today and UK Trade balance, manufacturing and industrial production data tomorrow.
Friday’s Non-farm payrolls report showed that the US economy lost 33 thousand jobs in September largely due to the recent devastating hurricanes. The US economy did however gain in other important areas as outlined below.
The employment report also showed that the US unemployment rate drop by 0.2% from 4.4% to 4.2% in September and the labour force participation rate increased by 0.2%.
The Fed’s most important labour data point, average hourly earnings showed a steady increase of 0.3% for the month of September, something the Federal Reserve Bank will be pleased to see as they look to normalise interest rates in the USA.
As a direct result of the releases the US Dollar gained some ground versus the Pound and Euro but has since given up some of its gains for the new trading week.
Important data release for the US Dollar this week include the latest set of minutes from the FOMC on Wednesday and consumer price (aka inflation) and retail sales data on Friday.
Data from the Eurozone was mainly in line with forecasts reporting solid growth for September in both the manufacturing and services sectors.
The unemployment rate held steady at 9.1%.
Data of importance for the Euro this week includes trade balance data from Germany tomorrow, industrial production data and keynote speech from ECB president Mario Draghi on Thursday and a speech from ECB Vice President Vitor Constancio on Friday.
UK Prime Minister Theresa May speech
7.00 am – German trade balance (August): previous reading showed surplus of €19.5 billion
9.30 am – UK trade balance (August): Julys figure was a deficit of £2.872 billion
7.00 pm – FOMC minutes from the Federal Reserve Bank in the USA
1.30 pm – US initial jobless claims (w/e 7 October): expected to rise to 254K
3.15 pm – ECB president Mario Draghi speech
1.30 pm – US CPI (inflation), retail sales (September): CPI expected to rise to 2% from 1.9% YoY and fall to 0.1% from 0.4% MoM. Retail sales expected to rise 0.4% MoM from -0.2%