Daily Report 05/09/2018
Good morning everyone,
Overnight In the UK, a poll by John Curtis suggests that as many as 59% would vote ‘remain’ in another EU referendum. Separately, there's reports that the EU is exploring ways to make the Irish backstop (keeping Northern Ireland in the EU customs union if there is no alternative to avoid a hard border) more palatable to the UK, which opposes a regulatory and customs border in the Irish sea. BoE Governor Carney hinted yesterday that he may stay on beyond his planned departure in mid-2019.
The main focus this morning will be UK services PMI report due out at 9:30am. optimistically just over half of analysts asked, believe a small rebound happened in August after the unexpectedly large decline to 53.5 in July. Risks, however, are probably skewed to the downside following negative surprises earlier this week in the manufacturing and construction surveys.
To the Euro zone and July retail sales are expected to have started Q3 slightly on the back foot. We forecast a fall of 0.2% in July. More timely survey evidence suggests that overall economic growth probably expanded in Q3 at a similar pace to the 0.4%q/q out-turns in the first half of the year.
Later this afternoon we focus on the US with July trade deficit forecast to widen out to around $50bn, largely reflecting the rise in the goods deficit released last week. Trade tensions continue to cloud the outlook for imports and exports.