UK Wage Growth in Focus After CPI Steady

UK wages are in focus today after CPI held at 3.0%. US CPI and Retail Sales will drive afternoon movement.

Previous Day's Market Highlights

The pound came under pressure after inflation disappointed, with CPI unexpectedly holding steady at 3.0%. The consensus forecast had been for an increase to 3.1%. The euro had received some support from above-forecast German GDP and unrevised Eurozone GDPSterling-euro fell below 1.1200 to its lowest levels since 20 October.
 
US PPI surprised to the upside ahead of Wednesday’s CPI release, but had limited impact on the dollar. The Fed’s Bullard was cautious on a December rate hike, citing risks of pushing inflation lower. The euro rallied against the dollar over the course of the day, breaking 1.1700 and then 1.1800 for the first time since 26 October.
 
Overnight, data showed that Q3 wages picked up less than expected in Australia, which weighed on the Aussie and pushed sterling-Aussie above 1.7300 to a new high since May.

Fed Chair Yellen, ECB President Draghi, and BoE Governor Carney discussed central bank communication at the ECB’s conference yesterday.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP / EUR 1.1151 1.1451 1.1083 3.21%
GBP / USD 1.3170 1.3321 1.3039 2.12%
EUR / USD 1.1811 1.1858 1.1553 2.57%
GBP/AUD 1.7372 1.7393 1.6675 4.13%
GBP / NZD 1.9149 1.9433 1.8378 5.43%
GBP / CAD 1.6753 1.7171 1.6383 4.59%

Today's Market Highlights

The busier calendar continues with UK employment data (09:30 GMT). September’s wage growth will be of particular interest and will likely be the main driver of the pound, which may see additional pressure today if wage growth fails to pick up pace.
 
Markets will keep an eye on the Eurozone’s September Trade Balance (10:00 GMT) and a speech from the ECB’s Praet for any surprises.
 
In the afternoon, attention will primarily be on the dollar, which could see pressure if both CPI and Retail Sales figure slow (13:30 GMT). Given yesterday’s above-forecast PPI print, expectations for CPI may be higher and therefore risk disappointment.

Today's Economic Calendar

Time Currency Release Consensus Previous
09:30 GBP Average Earnings Excl. Bonus 3M/Yr (Sep) 2.2% 2.1%
09:30 GBP Average Earnings Incl. Bonus 3M/Yr (Sep) 2.1% 2.2%
09:30 GBP ILO Unemployment Rate 3M (Sep) 4.3% 4.3%
09:30 GBP Claimant Count Change (Oct) 2.3K 1.7K
10:00 Multi MPC Member Haldane, ECB's Praet Speak
10:00 EUR Trade Balance €21.4B €21.6B
10:00 EUR Preliminary GDP s.a. YoY (Q3) 2.5% 2.5%
13:00 GBP MPC Member Broadbent Speaks
13:30 USD Retail Sales MoM (Oct) 0.0% 1.6%
13:30 USD Core Retail Sales MoM (Oct) 0.2% 1.0%
13:30 USD CPI YoY (Oct) 2.0% 2.2%
13:30 USD Core CPI YoY (Oct) 1.7% 1.7%
15:30 USD EIA Crude Oil Inventories (10 Nov) -2.850M 2.237M
00:30 AUD Employment Change s.a. (Oct) 15.0K 19.8K
00:30 AUD Unemployment Rate s.a. (Oct) 5.6% 5.5%