- July UK data improved overall, looking for a beat on manufacturing data.
- Euro weaker ahead of German industrial figure.
- Disinflationary environment remains in Switzerland, pressures Swiss Franc.
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EURO-ZONE ECONOMIC CALENDAR
The Euro is marginally weaker in early trade this morning, building on yesterday’s European Central Bank Rate Decision. The July German trade balance figure didn’t help either, with imports missing and being revised lower (a sign of softer domestic demand) and exports slipping below expectations as well (a sign that the global economy may be slowing).
The German industrial production figure could provoke a rebound in the Euro however, even though a smaller print than the prior month is anticipated. The German PMI Manufacturing survey increased from 48.6 in June to 50.7 in July, signaling a a modest expansion. Improvement will help steady the EURUSD ahead of the August NFP report at 08:30 EDT/12:30 GMT.
UK ECONOMIC CALENDAR
UK data this morning is expected to show a modest turn lower, although related indicators suggest that positive surprises could be in order. Both the Industrial Production and Manufacturing Production reports for July are expected to show minor contractions on a yearly basis; but the UK PMI Manufacturing index accelerated to 54.8 in July from 52.9, showing an accelerating growth environment.
As such, in context of improving inflation expectations (expressed by rising UK yields) which will be seen in the BoE/GfK 12-month inflation forecast, it is possible that UK data this morning surprises to the upside and provides another spark to the British Pound. Between the Euro and the Pound, the former is better suited to outperform given overall data trends.
SWISS ECONOMIC CALENDAR
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--- Written by Christopher Vecchio, Currency Analyst
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