Halifax reported a 1.6% increase in UK house prices for August after a 1.7% gain the previous month. The monthly increase was slightly above market expectations with an annual increase of 5.2% from 3.8% previously, although political developments dominated during the day.
EU Commission President Von der Leyen called on the UK to implement the withdrawal agreement. EU Chief Negotiator Barnier declined to comment directly but stated that the talks were difficult because the UK wanted the best of both worlds. The UK government attempted to play down the issue with comments that the new legislation was designed to clarify a few issues with Prime Minister Johnson and French President Macron in agreement on the importance of making headway this month.
Sterling declined to just below 1.3150 against the Dollar before finding support with the Euro strengthening and again, pushing the Pound to 1.1119 before correcting slightly.
The New York Times reported that the US is considering banning some or all products made with cotton from China’s Xinjiang province. US President Donald Trump also ramped up his anti-Chinese rhetoric by raising the idea of decoupling the US and Chinese economies.
Fed Chair Powell also reiterated that interest rates could remain extremely low for a prolonged period, potentially for years in order to support the US economy with no real disagreement over the path of US rates and further Dollar vulnerability. The more favourable Dollar stance is based on difficulties in finding an attractive alternative to the US currency, especially with other major central banks also engaging in very accommodative policies.
German industrial production increased by 1.2% for July after a 9.3% gain the previous month and below market expectations of a 4.7% increase. The Euro-zone Sentix investor confidence index improved to -8.0 for September from -13.4 previously and above consensus forecasts of -10.5. The data will offer some support to growth expectations, although there will still be expectations of a slowdown in the rate of improvement, especially given a net increase in coronavirus cases.
Further speculation continues that the central bank could engage in verbal intervention to restrain the currency whilst there were no expectations of any policy changes at the coming ECB meeting this week. Many investment banks however, expect a further increase in the quantitative easing programme later this year
Tensions over Brexit trade talks have limited a negative impact on the Euro whilst against the Dollar, the common currency drifts around the 1.1813 area in early Europe this morning.
Posted in Daily Market News on Sep 8 2020