Daily Market Report 19/07/2013

The strength of the pound was bolstered slightly by some better than expected retail sales figures in the UK resulting in a 0.2% rise against the euro by the close of business. The pound’s gains against the dollar were erased throughout Thursday afternoon as news from the US was absorbed by the market.

The jobless claims figures in the US were less than expected and then less than two hours later, the Philadelphia Fed manufacturing survey surpassed expectations posting a figure of 19.8 above the forecast 8.0. This really concluded the fundamental data which as far as currencies were concerned, were very quiet.

In other news, Ben Bernanke’s testimony in front of the senate continued but this did not hinder the progress of the stock market is the UK and the US. The FTSE, S&P and Dow Jones all posted record highs perhaps suggesting that risk appetite will not be dampened by rumours that changes in central bank policies could be on the cards. Meanwhile Morgan Stanley revised down the US GDP forecast from 0.4% to 0.3% in the second quarter. This move pulls Morgan Stanley’s views in line with that of Barclays, Goldman Sachs and JP Morgan. This suggested decrease could see some short term dollar weakness however the longer term view is for the dollar to strengthen as QE in the US will be scaled back at some point.

As we end the week, another relatively quiet day sees G20 ministers meeting in Russia and a handful of data from Canada. At this stage, next week’s events will already be in focus which will see euro zone consumer confidence, Chinese and European manufacturing data and the UK’s 2nd quarter GDP data. The forecast is for the UK to hit or surpass the expected figure although with the recent weakness of the pound, thoughts may be going even further forward to the Bank of England’s quarterly inflation report. Will Mark Carney be the catalyst for some changes in the UK’s inflation targets? Uncertainty will undoubtedly dominate investor’s minds as we continue throughout the summer.

Key Announcements:

9.30am – GBP – Public Sector Net Borrowing (Jun): The deficit is set to reduce £9.450bn.

13.30pm – CAD – Consumer Price Index (Jun): Set to rise to 1.2%.

13.30pm – CAD – Bank of Canada Consumer Price Index Core (Jun): Set to rise to 1.3%.