Daily Market Report 24/08/16

GBP

Sterling hit a three-week high against the dollar on Tuesday, with speculators cutting bets against the currency as data suggested that Britain's economy is holding up surprisingly well in the aftermath of the Brexit vote. Orders for British manufacturing exports hit a two-year peak in August, data released on Tuesday showed.

The Confederation of British Industry said its measure of overall factory orders dipped slightly in August to -5. That beat a median forecast of -9 while export orders improved to -6 from -22, their highest since August 2014. Combined with July inflation and retail sales numbers released last week beating forecasts, signs are that consumers had yet to rein in spending after June's vote to leave the European Union. Lower than expected jobless claims also gave the pound a lift.

USD

The dollar slid across the board on Tuesday, as investors shifted their focus away from hawkish remarks on U.S. interest rates by Federal Reserve officials and toward a speech on Friday by Fed Chair Janet Yellen. The greenback was given a boost over the weekend when Fed Vice Chairman Stanley Fischer said the U.S. central bank was getting close to its job and inflation targets, prompting speculation a rate hike could come as soon as September.

Yellen will speak at the annual meeting of world central bankers in Jackson Hole, Wyoming, at the end of the week. Investors are anxious to see whether Yellen will echo the hawkish views expressed by Fischer and New York Fed President William Dudley, or take a more subdued stance in line with the minutes from the Fed's July policy meeting. Those minutes suggested the central bank was not in a hurry to raise rates. However the dollar was helped by data showing that U.S. new home sales surged 12.4 percent to a seasonally adjusted annual rate of 654,000 units last month, the highest level since October 2007.

EUR

German Chancellor Angela Merkel said the European Union needs to show it can prosper without the U.K. as she and the leaders of France and Italy sought to chart a way forward for Europe. The leaders of the three biggest euro-area economies, Germany, France and Italy all met aboard the Giuseppe Garibaldi on Monday as concern mounts in the EU that its post-World War II construction is ill-equipped to deal with 21-century challenges. Even before the British exit referendum in June, the union was being buffeted by economic turmoil, a migration crisis, rising anti-EU populism and a surge in terrorism. With future relations between the EU and the U.K. in limbo for now, continental leaders are trying to move toward an initial vision of the post-Brexit bloc for a summit of all 28 EU countries except Britain next month. Merkel will talk to another 13 leaders between Wednesday and Saturday as she canvasses opinion before in-depth talks at the meeting in Bratislava on Sept. 16.

Key Announcements

15:30 - USD : Crude Oil Inventories - forecast at -0.7M against a previous of -2.5M