Previous Day's Market Highlights
Sterling made further gains on Tuesday, adding 0.5% across the board as labour market figures beat expectations. Data showed that average earnings increased at an above forecast 3.4% in November, their fastest pace since 2008, while the unemployment rate fell to 4%, the lowest level since 1975 with the number of people employed in the UK hitting a record high. The report was clear evidence of tightening in the labour market, showing that once Brexit uncertainty has blown over, interest rate increases from the Bank of England look more likely.
Elsewhere, economic sentiment figures from Germany beat expectations despite remaining firmly in pessimistic territory. The latest ZEW survey showed the index at a level of -15, the highest level since September last year, with many of the negative factors affecting the global economy (Brexit, China slowdown etc.) already expected and factored in to the survey. Other economic data was of lesser significance though US existing home sales did miss forecasts to the downside, giving investors a brief glimpse into the state of the US economy amid the current lack of US data due to the ongoing government shutdown.
The dollar bloc lost ground, not helped by the 3% fall in crude prices, with both the Australian and Canadian losing around 0.4% against major peers. The kiwi dollar gained around 0.5% overnight in reaction to the release of CPI inflation figures which beat market expectations, showing prices increasing at 1.9% in the fourth quarter when measured on a year-on-year basis.
Finally, equity markets in Europe closed in the red, losing 0.5%, as nervous investors fears over global growth combined with poor results from UBS to drive the market lower. Across the pond, US markets also closed steeply down, with all major indices losing over 1%, after the US cancelled planned trade meetings with China.
|Currency Pairing||08:00 Today||Vs 08:00 Yesterday||Four-Week High||Four-Week Low||% Change|
Today's Market Highlights
The economic calendar is lighter today, with no significant economic data scheduled for the pound, euro or US dollar. With this in mind, investors are likely to tread cautiously with one eye on tomorrow’s meeting of the European Central Bank, where downside risks to the euro present themselves in the shape of a cautious and dovish tone from Draghi.
Turning back to today, this morning’s Bank of Japan meeting passed as expected with benchmark rates kept on hold at -0.1%, though inflation forecasts were revised down to 0.9% for this calendar year – in line with expectations. Overall, it’s the same story as usual for the BoJ who continue to struggle with extremely low inflation and look to keep ultra-low interest rates for the foreseeable future.
The main highlight from the economic calendar for the remainder of the day comes from Canada in the shape of retail sales figures for November which will give market participants a view on the health of the Canadian economy surrounding the Christmas trading period. Expectations are for a month-on-month decrease of 0.6%, however the loonie is likely to take its next direction from the oil price rather than this data point.
Other data is of a lower tier including CBI industrial trends from the UK and preliminary consumer confidence figures from the eurozone. It is unlikely either figure will have a significant impact on price action, especially for the pound where investor focus continues to lie firmly with the Brexit situation ahead of next week’s vote on the government’s plan ‘B’ proposals. Finally, from the US, only Richmond Fed manufacturing figures are on the schedule which remains sparsely populated due to the shutdown. Market participants will likely keep a keen eye on the figure in an attempt to gauge the health of US manufacturing, especially in light of the slowing of other regional fed indicators.
Today's Economic Calendar
|1:30pm||CAD||Retail Sales (m/m)||-0.6%||0.3%|
|1:30pm||CAD||Core Retail Sales (m/m)||-0.4%||0.0%|
|3:00pm||EUR||Prelim. Consumer Confidence||-6.5||-6.2|