The pound consolidated during the overnight trade on bleak housing data and after British Chamber of Commerce cut UK’s economic growth forecasts. Hometrack Ltd. reported that the average cost of home fell 0.2% from October and was down 2.3% from a year earlier. Also weighing on the sterling was the BCC’s (British Chamber of Commerce) statement, warning that the risk of another recession “cannot be shrugged off”, and predicted the Bank of England will expand its bond purchase early next year. Looking ahead to today, CBI distributive trade survey headline the economic calendar, with the expectations for the sales balance to have deteriorated to –12 from –11, amid signs of renewed pessimism over the consumer outlook. Separately, BoE Governor Mervyn King will appear at the Treasury Committee to discuss the November Inflation Report. Later in the week, the major event is the Chancellors Autumn Statement and release of the OBR’s (Office for Budget Responsibility) Economic and Fiscal Forecasts on Tuesday. Market participants anticipate from the Chancellor to announce a number of policy measures aimed at boosting growth, but to remain in line with its fiscal austerity plans. Also scheduled for Tuesday is the Nationwide house price index for November and the BoE’s money and credit data for October. On Wednesday, we receive Gfk consumer confidence index for November. Finally Thursday and Friday see the release of the November manufacturing and construction PMIs, with the expectations for both figures to deteriorate further. Expect for the pound to remain volatile before Chancellor of Exchequer address the Parliament on Tuesday.
The euro gained across the board during the overnight trade on speculations European leaders are taking additional steps to tackle the region’s debt crisis. The single currency rebounded after German Finance Minster Wolfgang Scheuble urged fast-track treaty changes to tighten the budget discipline. German Chancellor Angela Merkel and French President Nicolas Sarcozy are planning a stability pact to counter the crisis before Eurozone finance ministers assemble in Brussels on Tuesday to discuss leverage options for the European Financial Stability Facility (EFSF). Also scheduled for the week ahead are the employment data in the region published on Wednesday, with the overall rate expected to remain at 10.2%. Germany’s unemployment rate is projected to remain flat at 7%. Finally PMI manufacturing and services surveys are scheduled for Thursday and Friday, with the expectations for the figures to deteriorate further as debt crisis continues to weight on growth.
The dollar dropped against the euro during the Asian session as global stocks gained curbing demand for so called safe haven currencies. Euro region debt fears have pushed investor into dollar safety in past couple of weeks, but stronger greenback has made export conditions tougher for US manufacturers. The ISM manufacturing data for November is scheduled for Thursday, with the expectations for the index to rise to 51.5 in November from 50.8 in October. Looking to the week ahead, US jobs data headline the economic calendar, with the expectations for the non-farm payrolls data to show an increase of 120K jobs in November, leaving overall unemployment rate unchanged at 9.0%. Expect for the dollar to consolidate against its major rivals should we see signs of economic improvement in the world’s largest economy.
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