Daily Market Report 22/07/2013

The pound made gains across the board on Friday despite fundamental data showing that the UK’s public sector borrowing costs hadn’t improved as much as analysts were expecting.

The UK’s borrowing costs improved from £12.770bn to £10.234bn; but missed expectations of an improvement to £9.450bn.

The only other data, in what was generally a quiet day, came from Canada, where although the rate of inflation improved to 1.2%, it still remained below the Bank of Canada’s 2% target. The Canadian dollar weakened as a result.

Looking ahead to the rest of the week, the UK’s growth in the second quarter will be in focus. A recent Bloomberg survey suggested that the UK grew by 0.6% in the three months leading up to June. A good figure here should provide some well needed support for the pound.

The US dollar will continue to be underpinned by fundamental data which will either suggest tapering of the Federal Reserves monetary stimulus program will occur sooner rather than later. Coming up this week from the US will be existing home sales data, new home sales data, durable goods and the weekly jobless claims figures.

There isn’t much expected from the euro zone this week, with the only notable data coming out on Wednesday with service sector and manufacturing figures from Germany, France and the euro zone as a whole.

Today’s agenda is pretty quiet with only the US existing home sales due for release, so we expect little movements in the markets generally today.

Key Announcements:

13.30pm – USD – Chicago Fed National Activity Index (Jun): Expected to improve from -0.3% to 0%.

15.00pm – USD – Existing Home Sales Change (Jun): Expected to fall to 0.5%.

15.00pm – USD – Existing Home Sales (Jun): Expected to improve to 5.26mn.