Let’s review the market trend and events from last week.
This article is originally referred from Orbex Market Review.
The euro currency was seen posting strong gains towards the later end of the week.
The jump in the common currency came about following the EU Summit where leaders in the European Union were seen agreeing to the migrant crisis that threatened to split the common union.
The euro was seen posting strong gains on the day and was also helped by the jump in the flash inflation which showed that the headline CPI increased 2.0% while core CPI rose 1.0% in June.
U.S. New home sales rebound more than expected
The new home sales data released last week on Monday showed that activity posted strong gains with new home sales rebounding more than expected in the month of May.
Data released by the U.S. Commerce Department showed that new home sales surged 6.7% to an annual rate of 689,000.
This comes following April’s activity which showed a decline of 3.7% which was revised to 646,000 during the month.
The data beat estimates as economists projected that new home sales increased 1.5%.
The new home sales data comes following last week’s housing starts.
Data showed that housing starts rose to highs of 5.0% on an annualized basis with an increase in construction activity especially in the mid-west region where new home sales increased 62.2%.
Activity in the midwest region. This came amid construction activity in the region rising 62.2% which was the strongest month over month growth in over four years. Building permits were driven On a regional basis, new home sales data was mixed.
While in the South, new home sales surged 17.9%, new home sales slumped in the Northeast and the West by nearly 10.0% and 8.7% respectively.
The overall trend showed that construction activity in the housing market overall increased at a pace of 11.0% in the first five months of 2018.
Building permits on the other hand were revised only slightly to 1.36 million up from 1.35 million as previously recorded.
In a separate report, the durable goods orders data was also released last week. Official data showed that headline durable goods orders declined 0.6% on the month in May.
Although durable goods orders fell, this was slightly better than the estimates which expected headline durable goods orders to fall 0.9%. Core durable goods orders also declined 0.3% missing expectations of a 0.5% increase.
UK GDP revised higher to 0.2% in Q1
The final revised GDP for the three months ending March 2018 was released by the UK’s Office for National Statistics.
The ONS’s final revised GDP showed that the UK’s economy expanded at a revised pace of 0.2% in the three months ending March 2018.
This was a surprise for the markets as economists polled had expected no change to the GDP figures during the quarter.
The slight revision was cheered by the markets and it quickly saw investors scaling up their expectations of a rate hike from the Bank of England at the August monetary policy meeting.
The data underlined the fact that the services sector had gathered momentum in the month of April as it raised expectations that the UK’s economy could pick up pace in the second quarter.
The weak preliminary estimates and the initial PMI numbers had prevented the Bank of England officials from increasing interest rates in May as previously forecast.
Reserve Bank of New Zealand holds OCR steady
The Reserve Bank of New Zealand held its monetary policy meeting last week on Thursday.
As widely expected, the central bank held the overnight cash rate unchanged at 1.75% marking an eleventh consecutive monetary policy meeting where interest rates were untouched.
The central bank was seen turning slightly dovish in its statement as it highlighted the growing risks surrounding the domestic conditions and the impact of global trade uncertainty which had increased in recent months.
The central bank cautioned that these risks could potentially impact the economy which many viewed to be dovish and the possibility that the RBNZ could also be looking to give itself more room for a possible rate cut if the economy continued to deteriorate.
Following the RBNZ’s meeting, the market expectations for a possible rate hike were pushed back to the middle of 2019.
The New Zealand dollar was seen extending declines following the release of the RBNZ’s statement.
Original Source: Orbex Market Review