Daily Economic Outlook: 25th August, 2015

The German IFO business survey for August will be the main economic data focus in the morning session. It will provide a timely guide to economic activity in the current quarter, especially in light of recent global economic developments, including the slowdown in China and the correction in equity prices. A fall in the headline index to 107.6 from 108.0 is expected, in line with the market consensus, driven lower by the expectations component, says Lloyds bank. 

An interesting counterpoint to the forecast is last week's surprisingly positive German 'flash' manufacturing PMI report for August, which jumped to 53.2 from 51.8. This provides some upside risks to today's IFO survey. The second estimate of Q2 German GDP will also be released today and is expected to be unrevised at 0.4% q/q, adds Lloyds Bank.

In the US session, new home sales and consumer confidence will be the key releases. Both indicators are expected to rebound, following surprising weakness in their respective prior months. 

"New home sales is likely to rise to around 500k in July from 482k in June and for consumer confidence to edge up to 91.4 in August from 90.9 in July. Market median forecasts for new home sales and consumer confidence are stronger at 510k and 93.4, respectively. We also see the Markit services PMI rising to 57.0 from 55.7", estimates Lloyds Bank.