Daily Market Report 13/08/2013

In the absence of any market moving data, demand for safe haven assets saw the US dollar strengthen against many of its peers, ahead of key retail sales figures due out this afternoon.

Consumer spending drives about 70% of the US economy, thus a strong retail sales figure should support the US dollar. Expectations are for the data to show a rise of 0.3% in July marginally lower than the 0.4% growth we saw in June, but nonetheless the data should suggest that the economy continues to recover.

The UK continued its recent run of good economic data yesterday as an industry report revealed that mortgage approvals increased by 15.7% in June from a year earlier and increased by 1.1% to 55,400 from the previous month.

Looking ahead to today, the UK’s latest inflation figures will come into focus, with a marginal drop from 2.9% to 2.8% expected. The euro could well be supported this morning as euro zone industrial production is forecasted to show a monthly growth of 0.8% and the latest ZEW survey is expected to reveal an increase in economic sentiment in both mainland Europe and from Germany.

This increase in economic sentiment could well be supported if data on Wednesday does indeed reveal that the recession in the euro zone has ended after six successive quarters of a decline in growth.

Inflation data from both Germany and the UK have been released this morning, both coming in line with forecasts at 1.9% and 2.8% respectively. Both bits of data have limited impact on the rates.

Key Announcements:

10.00am – EUR – Industrial Production (Jun): Expected to have improved to 0.2%.

10.00am – EUR – ZEW Survey Economic Sentiment in Germany (Aug): Expected to improve to 40.

10.00am – EUR – ZEW Survey Economic Sentiment in the euro zone (Aug): Expected to improve to 37.4.

13.30pm – USD – Retail Sales (Jul): Expected to have grown by 0.3%.