Market Movers
The manufacturing sector in the UK is suffering from the slowdown in the manufacturing sector globally and the strong GBP, which makes UK goods more expensive. This is also evident from PMI manufacturing, which has been relatively weak for some time. Thus, we estimate that manufacturing production increased only slightly by 0.4% m/m in July. In this case, manufacturing production would have declined by 0.5% in the three months to July compared with the three months to April.
Bank of Canada rate decision is due this evening. The Canadian economy has been hit hard by the drop in the oil price and growth contracted in the first two quarters of this year. Despite this, the central bank is widely expected to keep the interest rate unchanged at 0.5% after it cut rates by 25bp in July. Market pricing suggests an implied probability of only 15% for a cut.
On the other hand, the Reserve Bank of New Zealand (RBNZ) is widely expected to lower the Official Cash Rate by 25bp tonight for the third consecutive meeting amid lower growth and inflation. Markets currently price a roughly 95% probability of RBNZ delivering the cut.
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