Daily Market Report 30/08/16

GBP

On Friday, at the Fed’s conference in Jackson Hole, Janet Yellen said that “in light of the continued solid performance of the labour market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months”. The Fed last raised rates in December last year, and so far this year has held off hiking further. Investors are currently pricing in an 18% chance of a rate hike in September, and a 53% chance in December.
 
The University of Michigan said that US consumer confidence declined to a four-month low in August. The final index of sentiment stood at 89.8 this month compared with 90 in July. As long-term inflation expectations dropped to record lows, consumers anticipated smaller income gains.

USD

The Office for National Statistics confirmed that GDP growth picked up to 0.6% in the second quarter, as expected,  from 0.4% in the first quarter. In year-on-year terms, GDP was up 2.2% on the year, also in line with forecasts. Household spending was up 3%, the strongest growth since the end of 2007, before the global financial crisis. The data also showed investment by businesses unexpectedly rose between April and June. This period mostly covered the run-up to the Referendum, compared with the previous three months.
 

Key Announcements

09:30 – GBP : M4 Money Supply m/m, expected to increase by 1.2%

15:00 – USD : CB Consumer Confidence expected to fall to 97.2 from 97.3