GB POUND
A tough week for sterling. The pound started the week trading at 1.1959 against the Euro and 1.3370 against the US dollar, by the end of the week the pound was trading at 1.1826 against the Euro and 1.3251 against the US dollar.
The British Retail Consortium reported that retail sales declined in August, compared with the same time last year sales were down 0.9%. Good weather and the Olympics are thought to be behind the disappointing figure which is backed up by the fact that sales of barbeques and wine increased in this period.
The UK’s service sector recorded growth in August. Markit services PMI (Purchasing managers index) showed that the index rose from 47.4 in July to 52.9 in August, this has been the largest month-on-month growth in the survey’s history.
EURO
Greece is facing more pressure from the EU amid reports that it has only implemented two out of the fifteen reform measures it agreed as part of its rescue package last year.
The European Stability Mechanism (ESM) agreed to give Greece up to €86bn by 2018 in return for reforms. So far 7.5bn of the first 10.5bn tranche has been released, the rest is due to be released this month but the payment could be withheld till the end of the year if the 19 EU finance ministers feel Greece has not done enough.
The Greek finance minister Euclid Tsakalotos, said last week that the Greece’s next aid pay-out could be delayed because the government had failed to implement enough reforms, however he did insist that any hold up would last for days, not weeks!
In Thursdays press conference the ECB announced that they will keep interest rates unchanged. Mario Draghi said “Interest rates have to stay low for the economic recovery to proceed, and to firm up”.
The ECB also decided to continue its quantitative easing programme, buying €80bn of bonds per month till March 2017, “or beyond if necessary”.
Eurozone retail sales beat expectations, forecast at 1.8% it came in at 2.9%.
Eurozone GDP came out as expected forecast at 0.3% Q/Q and 1.6% Y/Y.
US DOLLAR
The Job Opening and Labour Turnover Survey (JOLTS), a barometer of the US economy that is closely watched by the Fed delivered good news. Employers posted 5.9 million jobs in July compared to the 5.62 million in June.
Data showed that US Initial jobless claims came in at 259,000 against a forecast of 265,000. Continuing jobless claims posted 2.144m against a forecast of 2.153m, down from last month’s 2.151m.
Elsewhere
Australia decided to leave interests rates at a record low of 1.5%.
The Japanese economy expanded in the second quarter, official figures showed that GDP grew at 0.2% Q/Q and 0.7% annualized, both of these figures came in ahead of expectation.
The Bank of Canada decided to leave interest rates unchanged in September, the bank said that global growth in the first half of 2016 was slower than it had projected, but expected it to strengthen throughout the rest of the year.
