Global equity markets ended mostly lower last week, as Turkey’s currency crisis escalated. UK markets ended the week in positive territory, amid continuing weakness in the British Pound. On the data front, UK’s quarterly gross domestic product (GDP) advanced in line with market forecast in the second quarter of 2018. Meanwhile, trade deficit narrowed more-than-expected in June. Moreover, industrial production climbed more than market anticipation on a monthly basis in June, marking its first rise in four months. Additionally, monthly manufacturing production rose more-than-expected in the same month and construction output unexpectedly climbed on a monthly basis in June. Furthermore, the Halifax house price index recorded a more-than-anticipated rise on a monthly basis in July. European markets ended the week on a negative footing, amid fears that the Turkish crisis could affect other Eurozone countries and after the European Central Bank hinted at intensifying downside risks to the global economy. On the macroeconomic front, the Eurozone’s Sentix investor confidence index gained more than market forecast to a three-month high level in August. Separately, in Germany, trade surplus widened more than market expectations in June. Moreover, current account surplus expanded more-than-anticipated in June. On the other contrary, the nation’s industrial production registered a more-than-expected decline on a monthly basis in June. Also, monthly factory orders fell more than market forecast in June, recording its biggest fall since January 2017. US markets closed mostly weaker last week. On the data front, the US monthly budget deficit widened more-than-expected in July, marking its biggest deficit in six years. Additionally, average hourly earnings registered a decline on a yearly basis in July. Moreover, consumer credit advanced less than markert forecast in the same month. Additionally, the producer price index (PPI) rose at a slower-than-expected pace on an annual basis in July. In contrast, the nation’s consumer price index (CPI) advanced as expected on a monthly basis in July. Further, JOLTS job openings surprisingly climbed for a third consecutive month in June, while initial jobless claims registered an unexpected drop for the first time in three weeks in the week ended 4 August 2018. Asian markets ended mixed last week.


Currency Update


The EUR ended lower against the USD, amid concerns over European banks exposure to Turkey. The British Pound ended weaker against the greenback, amid persistent fears that Britain will leave the EU without a deal. The US Dollar ended stronger against its major counterparts last week, as tensions in Turkey intensified, after the US President, Donald Trump, announced double tariffs on Turkish aluminium and steel imports.



RBA Governor, Philip Lowe sees inflation reaching
target in 2020, steady rates


The Reserve Bank of Australia (RBA) Governor, Philip Lowe, stated that he expects the economy to report good growth, the unemployment rate to ease down gradually and inflation to reach the 2.5% target midpoint in 2020. Further, he reiterated that the board does not see a strong case for a near-term policy change.



The Week Ahead


Going ahead this week, investors will closely watch the US NFIB small optimism index, MBA mortgage applications, advance retail sales and industrial production along with UK’s CPI, PPI, claimant count rate, ILO unemployment rate and retail sales for further direction. Additionally, the Eurozone’s GDP, CPI, industrial production and trade balance along with Germany’s GDP, CPI and the ZEW survey indices will keep investors on their toes.



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