An early minor reaction to week press reports that the ECB was mulling interest rate caps for peripheral Eurozone government bonds was the only thing to report from an otherwise dull, holiday-affected Asian start to the week.
Germany’s respected Magazine Der Spiegel claimed that the ECB is considering capping rates on Eurozone government bonds by setting pre-announced yield limits over German Bunds and associated intervention, if needed. The magazine said the ECB would decide whether to implement such a scheme at its September meeting. The ECB said it had no comment on the report.
This week should see a return of more EU headlines as officials return after the holiday break. Germany’s Merkel meets with the Spanish PM later today and Greek PM on Friday following a Thursday meeting between Merkel and France’s Hollande.
At the weekend China released its latest house price data for July which showed price increases in the largest number of cities for 14 months as two interest rate cuts and incentives for first-time buyers kicked in. Prices rose from last month in 49 of the 70 cities monitored in the survey and compares with just 25 cities in June. China still has property-specific restriction in place to contain a housing bubble and the latest data might prevent the PBOC from any aggressive monetary easing.
While on house prices, the Rightmove survey of UK house prices showed a 2.4 percent m/m decline in August, the largest August decline on record and follows a 1.7 percent decline the previous month. While August is traditionally a slow month in the property sale cycle, this year August saw a 0.4 percent increase in the number of properties offered for sale in the market. Compared to a year ago, property prices were 2.0 percent higher.
EURUSD failed to break to higher ground on Friday as a number of factors combined to put pressure on the single currency. Reports circulated that the German Chancellor is thought to be considering easing the terms of Greece’s bailout started the selling and the pressure remained on for most of the session. Another set of better US data also pushed the US dollar higher. Canadian CPI was softer than expected and helped USDCAD reverse Thursday’s losses.
On the US data front, provisional August Michigan confidence index improved to 73.6 from 72.3 while leading indicators were also firmer at +0.4 percent following -0.4 percent the previous month. Wall St finished positively with the S&P higher for the sixth week and very close to 4-year highs.
Data Highlights
- CA Jul. CPI out at -0.1% m/m, +1.3% y/y vs. 0.2%/1.5% expected and -0.4%/1.5% prior resp.
- CA Jul. Core CPI out at -0.1% m/m, +1.7% y/y vs. 0.2%/2.0% expected and -0.4%/2.0% prior resp.
- US Aug. Michigan Confidence Index out at 73.6 vs. 72.2 expected and 72.3 prior
- US Jul. Leading Indicators out at +0.4% m/m vs. 0.2% expected and revised -0.4% prior
- NZ Jul. Performance of Services Index out at 53.1 vs. revised 53.9 prior
- UK Aug. Rightmove House Prices out at -2.4% m/m, +2.0% y/y vs. -1.7%/+2.3% prior resp.
(All Times GMT)
- JP Leading/Coincident Indicators (0500)
- JP Convenience Store Sales (0700)
- EU Construction Output (0900)
- US Chicago Fed Activity Index (1230)