Daily Market Report 03/09/15

Yesterday data showed a pick-up in house building helped growth in Britain's construction sector speed up slightly last month, but the expansion remained weaker than last year's robust rebound. The Markit construction Purchasing Managers' Index (PMI) rose to 57.3 in August from 57.1 in July, indicating solid growth but below the 57.5 forecast. The survey published on Wednesday showed construction firms were bullish about the future, with most firms expecting to be busier over the coming year, while only one in 20 expected a contraction. On the back of this Sterling lost ground against both the EUR and USD.

The ADP estimate yesterday showed that American companies created slightly fewer jobs than expected in August, adding to the poor manufacturing data seen in the US this week. The ADP report shows that 190,000 new employees were hired in August, below the 200,000 that was forecast. Also July’s reading has also been revised down, from 185,000 to 177,000. This suggests that Friday’s non-farm payroll, the main measure of US employment, could be weaker than expected.

US factory orders in July came in lower than expected, up 0.4%. This was lower than the forecast 0.9% and well below the 2.2% gain recorded in July. Poor data this week and the continuing crisis in China may result in the Fed delaying their interest rate hike this month. Towards the afternoon we saw the USD weaken on the back of this data.

The Feds Beige Book released last night said the economy continued to grow throughout most of the country during July and August, stating the solid rebound in economic growth in the second quarter continued into the summer but at a more moderate pace.

Key Announcements

EUR - 09:00: Markit Services PMI expected to stay the same at 54.3
GBP - 09:30: Markit Servies PMI expected to increase to 57.6 from 57.4
EUR - 12:45: ECB Interest Rate Decision expected to remain unchanged at 0.05%
EUR - 13:30: ECB Monetary Policy Statement 
USD - 14:45: Initial Jobless claims expected to rise from 271K to 275K.