Daily Market Report - 28/08/2014

GBP:
A report out from Foxtons yesterday mirrored what Savills were saying a day earlier. They say the range of policy initiatives introduced this year at controlling mortgage lending, together with the expectation of an interest rate rise is starting to have an impact on short term demand for houses among buyers. They expect this to lead to lower rates of growth in property transactions and prices during the second half of the year.

USD:
Another good sign for the US is their improving the budget deficit, (the difference between government revenues and expenditures) it is expected to narrow to its lowest as share of the economy since 2007. According to the report this can be attributed to the declining jobless rate which is resulting in increasing both individual and corporate tax revenues, therefore increasing government revenues.

This will help narrow the gap next year to about a third of the record $1.4 trillion deficit reached in 2009.

EUR:
The EUR began to rise after falling to its lowest level in almost a year against the USD as speculation cooled that the ECB will add further monetary stimulus when it meets next week. A report released stated that the ECB would unlikely add more stimulus unless the August inflation report raised the risk of deflation in the Eurozone.

Consumer Confidence in Germany also weakened yesterday due to the weakening Eurozone economy and recent geopolitical instability in Iraq, Israel and Ukraine. In particular, the sanctions against Russia, which are already significantly impacting exports, could become a real risk for the German economy.

This is the first fall in the consumer confidence since January 2013. Uncertainty over the German economy also hit confidence after it shrank in the second quarter of this year.

Key Announcements:

EUR- 08:55- German unemployment rate expected to stay the same at 6.7%

EUR- 13:30 -German consumer price index expected to stay the same at 0.8%

USD - 13:30 - GDP expected to increase to 4%

USD- 13:30 - Initial jobless claims expected to rise to 300k

USD - 13:30 - Continuing Jobless claims expected to rise to 2.513M

USD - 15:30 - Pending home sales expected to increase by 0.5%

*All times shown are BST

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