Market movers today
We have a packed calendar today, not least of all in the Scandi space. In Norway, we get the credit indicator and unemployment data this morning. The data are unlikely to change anything for Norges Bank, which we still expect to hike in September. In Denmark, we get the second estimate of Q2 GDP growth, the unemployment rate and wage growth. See page 2 for details.
The most important global release is the euro area inflation print. We expect core inflation was unchanged at 1.1% y/y, the level it has been fluctuating at since early 2017. Underlying inflation is gradually moving higher, as wage growth has increased. We still do not expect the ECB to hike rates before 2019 at the earliest.
Also look out for Fitch releasing its rating for Italy.
Selected market news
The collapse of the Argentinian Peso accelerated yesterday after President Macri called for the IMF to accelerate disbursement under its standby programme amid rapidly deteriorating market sentiment. The Argentinian central bank hiked its benchmark rate from 45% to 60% in a forceful attempt to shore up confidence. However, despite the hike, the Peso continued to weaken. See more in Flash Comment Argentina: Peso collapse, emergency central bank hike – what now IMF?, 30 August 2018.
China’s manufacturing PM I rose to 51.3 in August from 51.0 and non-manufacturing PMI increased to 54.2 from 53.7. The stronger data is unlikely to help sentiment with regards to the Chinese economy as the US is apparently planning to impose USD200bn of new tariffs on Chinese imports faster than previously expected.
That was not the only trade war-related news out overnight. US President Trump also threatened to pull the US out of the World Trade Organisation and he also rejected an offer from the EU to remove levies on cars. The US-Canada trade talks are said to have made progress ahead of a deadline today.
USD/INR hit an all-time high yesterday, climbing 0.8% in the past three days as oil price continue to climb. India is a net oil exporter and the country ‘s external balance dep ends heavily on oil price developments. The US is mulling over sanctions against India for purchasing Russian arms (>USD5bn deal). India is following Turkey in its plans to buy Russian S-400 missile air defence systems.
