Daily Economic Outlook: 26th August, 2015

In terms of data, the US durable goods report for July is expected to show firmer growth at the outset of Q3. Following the 3.4% rise in headline orders in June, a 0.5% rise is expected in July, states Lloyds Bank. In the UK, BBA mortgage approvals for July and the CBI distributive trades report for August are expected to show that the outlook for domestic activity remains firm.

Following yesterday's announcement by the PBoC to lower its benchmark lending rate and reduce its reserve requirement ratio, financial market sentiment in the day ahead is likely to be dictated by the reaction of the Chinese equity market to the easing measures. In part, the move by the PBoC reflected concerns over the outlook for the Chinese economy. As such, the prospect of additional easing remains likely especially with the risk that further yuan depreciation and additional capital outflow would place upward pressure on market interest rates, delivering an undesirable tightening in financial conditions, says Lloyds Bank.

In the face of ongoing global risks, the outlook for monetary policy in the US continues to remain uncertain. Later today, New York Fed president Dudley's, who is a current voter on the FOMC, speaks at an event (15:00 BST) should provide some insight into his views on how much caution is warranted in tightening policy, given recent events in China.