Norges Up Next
The Australian dollar saw some slippage overnight after weaker than expected construction data. A succession of bearish press reports also sounded warnings about risks to economic growth − both in China and domestically in Australia itself. News that a major international investor has lowered its equity stake in an Australian miner did nothing to boost sentiment either, especially against the backdrop of weak iron ore prices. Meanwhile there were no further headlines out of Europe overnight − yesterday’s revelations of accelerated capital flight out of Spain were worrying for sure, but investor attention remains focused on the ECB’s next press conference on Sept. 6 and specifically on whether ECB President Draghi will present a credible bond buying plan with a sporting chance of turning the crisis around. Data in the US were mixed, with the consumer confidence index dropping to 60.6 in August against a consensus estimate of 66.0. Manufacturing activity, as indicated by the Richmond Fed, contracted at a less pronounced rate in August. The S&P/Case Shiller home price index improved by 0.9% m/m in June but our US economists note that the index lags actual pricing and the more timely measures have slowed a bit since Q2. Ahead today, the Fed’s Beige Book will probably offer further insights on the economic activity in the Fed districts. Also on tap is the policy rate decision by Norges Bank. We expect the central bank to keep the deposit rate unchanged at 1.50%, despite a strong NOK. A robust domestic economy (supported by growing household consumption) should keep the central bank on the sidelines, further supporting NOK.
Click here to read the full report: UBS Morning Adviser Europe
UBS Investment Bank