A huge upward revision to the US economic growth estimate caused a rise in US shares and another bout of US dollar strength yesterday. The markets were expecting the 2nd estimate of US economic growth to be revised upward to somewhere around 3.2% but the figure came in at 3.7% and that boosted confidence. The big question is whether that puts the Federal Reserve's September rate hike back on track but I suspect it doesn't. Turmoil in Asian markets and a number of less positive pieces of data are likely to ensure the Fed maintains a watching brief for now. This afternoon's US personal income and expenditure data will be interesting in that context.
We had a GfK consumer confidence index for the UK published overnight and that matched June's index reading of +7 which doesn't sound like much but it is the best in 15 years. Sterling will take heart from that and may get a 2nd boost if the 2nd release of UK GDP data for Q2 gives us an upward revision even remotely as positive as the US data. The markets are expecting 2.6% annualised growth but recent data and upward revisions in other forecasts would suggest this may be conservative. Another day of volatility is highly likely, especially as this is the last working day of the month for UK traders before the bank holiday Monday.
Before all that we get a raft of German inflation data, retail sales from Spain and Sweden as well as a number of other indices from Europe. Within the morning, we will get industrial and consumer confidence indices for the whole of the Eurozone. Barring Germany, the news across Europe is not good, so it will be interesting to see if the data is as bad as the previous -2.9 (industrial) and -7.1 (consumer). The euro has gained a little ground this week but it is under the cosh again.
And then we have the weekend; a long weekend for the UK but the rest of the world will be trading the last working day of the month without the 40% of volume that the UK adds to the forex market. With so much mixed news whipping around the newswires and so much uncertainty, there is a very strong chance we will see significant volatility on Monday. This is a great opportunity for anyone to place an automated order at a 'tongue-in-cheek' level to see if they can buy or sell their needs at very attractive levels outside of the daily trading range. Have a chat with your Halo Financial Consultant to see how this volatility could benefit you.
And well done Usain Bolt for once again beating the cheater. Mind you, if you are the fastest man in the world, you would probably be good at noticing people behind you because that is where they are most likely to be. So how did Usain not see the news cameraman who wiped him out with his Segway?
Have a great weekend everyone. See you in September.