Daily Market Report 25/07/2013

The euro was buoyed yesterday following better than expected data from France, Germany and euro zone as a whole, in what was otherwise a lacklustre day in the markets.

Both service and manufacturing sectors in Germany and the euro zone expanded for the first time in 18 months. Whilst France’s respective sectors did not expand, they did improve and didn’t contract as much as the market was anticipating. Adding to the improvement in consumer sentiment on Tuesday and reports from Monday that perhaps Spain may be on the verge of escaping a recession; optimism may be on the rise for the euro.

The US dollar was buoyed in the afternoon as data from the US surpassed expectations. Firstly data from Markit showed that the manufacturing sector expanded even further to 53.2. More significantly however, new home sales increased to the highest in five years by 8.3% to 497,000 units. The data strengthened the US dollar erasing some of the losses the currency made earlier in the week.

The only other significant data came from New Zealand as the RBNZ held interest rates at 2.5% as expected and hinted that looking beyond the end of 2013, the RBNZ may be in a position to start raising rates again.

Today, the UK’s growth story in the second quarter will come into focus, with markets expecting the UK to have grown by 0.6%. But before that the euro will come under focus, with German business climate figures expected to have improved from June.

Later the US will be under focus with jobless claims and durable goods set to be carefully scrutinised, in particular the job figures as this is one of the key points behind the Feds decision to taper monetary stimulus.

Key Announcements:

9.00am – EUR – German IFO Current Assessment (Jul): Expected to rise to 110.

9.00am – EUR – German IFO Business Climate (Jul): Expected to rise to 106.1.

9.00am – EUR – German IFO Expectations (Jul): Expected to remain at 102.5.

9.30am – GBP – Gross Domestic Product (QoQ) (Q2): Expected to rise to 0.6%.

13.30pm – USD – Durable Goods Orders (Jun): Expected to fall to 0.5%.

13.30pm – USD – Initial Jobless Claims (Jul 19): Expected to rise to 340,000.