UK unemployment held steady at 2.3% in Q3 while there was a slight increase in the October claimant count. Average earnings was the real focus and showed growth of 2.2% in the year to September, beating expectations but still a slight dip from an upwardly-revised 2.3% for August. Sterling failed to hold initial gains with the Euro at 3-week highs above 1.1100 with resistance above 1.3200 against the Dollar.
Bank of England Deputy Governor Broadbent stated that the BoE’s November rate hike with above-target inflation and a lack of spare capacity. Looking forwards, there is still uncertainty on multiple fronts but Brexit does not necessarily imply low interest rates, also adding that the effects are ambiguous.
Sterling gradually regained ground in US trading hours with the Euro unable to hold above 1.1110 and retreating to 1.11745 ahead of this morning’s retail sales data. The Pound held below 1.3200 against the Dollar as markets also monitored the ongoing Brexit debate.
Firm data for the Dollar in the form of consumer prices and retail sales yesterday provided a backbone for the Greenback. That said, Chicago Fed President Evans, a known dove, in a stated yesterday that the US was not living up to inflation targets and that the Dollar remained on the defensive.
The conflicting data and news caused a mixed trading sentiment as Cable fluctuated just above 1.3150 whilst against the Euro, gains were made to reach 1.1770.
Consumer prices for October rose 0.1% with an annualised rise of 1.8% to continue what has been a couple firm readings following last month's 0.5% increase. Further, retail sales rose 0.2% for October, beating expectations of no change from the previous month despite a slight hiccup in core retail sales that missed forecasts of 0.2% to finalise at 0.1% monthly growth.
To finish off the busy Wednesday, the New York Empire manufacturing index retreated to 19.4 for November whilst the gain in orders and prices received rose at a greater pace. Finally, the services sector received upward pressure as prices rose 2.7% year on year as energy prices retreated.
The Euro hit its highest level since the ECB meeting in late October when they announced a 9-month extension to their QE program at a reduced monthly amount, and signaled low-interest rates for the foreseeable future. Stronger German and Eurozone growth combined with concerns over the US outlook have provided a positive backdrop for the single currency.
In the Euro area, the final October HICP inflation figures are due to be released today, likely confirming that headline inflation fell back to 1.4%. The focus will be on what items caused the unexpected fall in service price inflation, bringing core inflation down to 0.9%. Judging from the individual country figures released already, we expect the drop to be due mainly to volatile items such as package tours and hence not point towards the start of any sustained downward trend in service price inflation
Data wise in Europe today, EMU’s final CPI results for the month of October are due along with speeches by European Central Bank's’ Jazbec, Mersch and Constancio.
Data To Watch:
09:30 GBP Retail Sales ex-Fuel (MoM) (Oct)
09:30 GBP Retail Sales ex-Fuel (YoY) (Oct)
09:30 GBP Retail Sales (MoM) (Oct)
09:30 GBP Retail Sales (YoY) (Oct)
10:00 EUR Consumer Price Index (MoM) (Oct)
10:00 EUR Consumer Price Index - Core (YoY) (Oct)
10:00 EUR Consumer Price Index - Core (MoM) (Oct)
10:00 EUR Consumer Price Index (YoY) (Oct)
13:30 USD Continuing Jobless Claims (Nov 3)
13:30 USD Initial Jobless Claims (Nov 10)
13:30 USD Philadelphia Fed Manufacturing Survey (Nov)
14:00 GBP BOE's Governor Carney speech
14:00 GBP MPC Member Cunliffe Speech
14:00 GBP MPC Member Broadbent Speech SPEECH
14:10 USD FOMC Member Mester speech SPEECH
14:15 USD Industrial Production (MoM) (Oct)
14:15 USD Capacity Utilization (Oct)
14:30 USD FOMC Member Brainard Speech SPEECH
15:00 USD NAHB Housing Market Index (Nov)
17:30 USD FOMC Member Kaplan Speech SPEECH
20:00 EUR ECB Vice President Vitor Constancio speech
21:45 USD FOMC Member Williams speech
Posted in Daily Market News on Nov 16 2017