Global equity markets ended firmer last week, as global trade tensions subsided, after the US and the European Union (EU) agreed to negotiate on trade policies. UK markets ended the week in positive territory, amid robust earnings report and easing trade tensions. On the macro front, UK’s BBA loans for house purchase surprisingly jumped in June. Further, the CBI industrial trend orders dropped less than expected in July. European markets ended the week on a stronger footing, after the US and EU agreed to cut trade tariffs. On the data front, Eurozone’s manufacturing sector activity surprisingly climbed to its highest level in two months in July, while the region’s services PMI recorded a more-than-expected decline in the same month. Further, the flash consumer confidence index eased less-than-expected in July, recording its lowest level in nine months. Separately, Germany’s manufacturing PMI unexpectedly rose to a three-month high level in July, while the services PMI declined in the same month. Further, the consumer confidence index unexpectedly eased in August. US markets ended the week in green. Data indicated that the US Markit manufacturing recorded an unexpected advance in July. On the flip side, the nation’s Markit services PMI fell more than market expectations in July. Additionally, gross domestic product grew less-than-expected on a quarterly basis in the second quarter of 2018. Durable goods orders registered a less-than-expected rise on a monthly basis in June. Further, the Michigan consumer sentiment index dropped to a six-month low level in July. Moreover, monthly new home sales dropped to an eight-month low level in June. Further, the MBA mortgage applications eased in the week ended 20 July 2018. Furthermore, advance goods trade deficit widened more than market anticipations in June. Additionally, initial jobless claims rose more-than-expected in the week ended 21 July 2018. Asian markets ended firmer last week, tracking gains in their US counterparts.


Currency Update


The EUR ended lower against the USD, after the European Central Bank (ECB) signalled key interest rates to remain unchanged till the summer of 2019 and confirmed that it would end its bond buying program in December. The British Pound ended weaker against the greenback, after the EU’s Chief Brexit negotiator Michel Barnier rejected UK Prime Minister, Theresa May’s customs plan. The US Dollar ended mostly higher against its major counterparts last week, amid robust economic data in the US.



ECB leaves benchmark interest rates steady, sees QE ending this year


At the ECB's July monetary policy meeting, the central bank decided to keep its benchmark interest rate unchanged at 0.00%, as widely expected and maintained the forward guidance on monetary stimulus. Meanwhile, officials expect key interest rates to remain at their present levels at least through the summer of 2019 and inflation close to 2.0% over the medium term. Further, the ECB Chief, Mario Draghi, indicated that economic recovery in the region is solid and broad-based, despite constant uncertainties over global trade.



The Week Ahead


Going ahead this week, market participants will keep a tab on the FOMC interest rate decision, the US ADP employment change, Markit manufacturing and services PMI along with ISM employment data, trade balance, change in non-farm payrolls and unemployment rate for further direction. Also, the Bank of England’s interest rate decision, UK’s GfK consumer confidence index, Markit manufacturing and services PMI along with Eurozone’s gross domestic product, unemployment rate, consumer price index, economic and consumer confidence index, Markit manufacturing and services PMI across the region will be on investor’s radar.



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