Daily Market Report – 14/07/2014

GBP
With relatively little news out from the UK we saw minimal movement from
GBP against its major counterparts. We did however see the first signs of
weakness for the UK economy earlier in the week with UK house prices rising by
-0.6% month on month, which was also matched by sharp decrease in new mortgage
approvals.

These two figures combined with falling construction output in an
economy driven by the house prices represented the first signs of

GBP
With relatively little news out from the UK we saw minimal movement from
GBP against its major counterparts. We did however see the first signs of
weakness for the UK economy earlier in the week with UK house prices rising by
-0.6% month on month, which was also matched by sharp decrease in new mortgage
approvals.

These two figures combined with falling construction output in an
economy driven by the house prices represented the first signs of
weakness. To counter this relative negative data, we have had survey releases
from the UK that stated business sentiment is at its most positive in the UK
than the other G10 nations.

The growing optimism and improvements in business  output could be ready
to take up the slack from the small losses in the housing market. 

USD
The Greenback fluctuated between gains and losses verses the Euro amid
speculation Yellen will offer further insight to when the Fed intends to
commence with interest rate increases.  Despite growing calls for the Fed
to increases interest rates analysts are not anticipating any adjustment until
2016, with June being the earliest touted month.

US bond auction uptake was at its highest on the back of Portugese bank,
Spirito Santo, missing the debt repayment last week, whilst also reporting they
may struggle with future repayments. Although we haven’t seen the FX markets
react to this yet, we may see some USD strength in the short to mid-term with
people seeking safe-haven assets again.  

EUR 
Having decreased interest rates to .15% the ECB announced last week that Europe
is still subject to low inflation. Draghi is acutely aware of the issues that
face him with calls for further intervention ringing loud around the Euro-zone.

In June ECB identified lending to companies and households as a key weakness in
the euro area’s fragile recovery. The so-called TLTRO program, part of a wider
package of measures announced in June, offers as much 
as €700bio of low-cost funding tied to bank lending.

Key Announcements:
10:00 – EUR – Euro-Zone Industrial Production (MAY) expected to contract 1.2%

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