What’s been happening?

UK: Data out of the UK this morning was mixed. The unemployment figures fell to a new 42-year low, beating market expectations in the process. However, wage growth came in below expectation. The pound has reached the strongest level against the US dollar since Brexit over recent weeks and now shows signs of further strength heading towards next month’s expected rate rise. The expectation of strong employment and wage growth could further bolster the Bank of England’s chance of raising interest rates next month. The chance of a rate rise remains high, but any decision against the rate rise could see the pound sold by market participants.

EU: German ZEW figures came out this morning, falling aggressively by 13.3 points and widely missing expectation. It’s the lowest figure in the region since November 2012. This was largely attributed to the current conflict in Syria and the ongoing trade war concerns between China and the US. Makes us ask a question - where to next for the euro? 

US: President Trump is at it again and just can’t keep away from Twitter. His latest tweet suggested that both China and Russia are playing the “currency devaluation game.” Today sees industrial and manufacturing production data come out of the US along with building permits. The market may receive some hints regarding the Fed’s interest rate policy this afternoon with a trio of Fed members (Williams, Quarles and Harker) speaking at various events. Retail sales for the US also came in yesterday above market expectation at 0.6%, however this did nothing for the dollar and could not halt the advancing pound.

What’s coming up?

UK: CPI and retail sales data will be released tomorrow, and BoE’s Brazier will be speaking in London on Thursday.

US: Industrial and manufacturing production data will be released at 13:15 today, along with building permits at 12:30. Fed members (Williams, Quarles and Harker) will be speaking at various events, hence new information regarding interest rates is to be expected.

EU: Markets will now watch for the CPI inflation figure, which will be coming out tomorrow, with no other data of note coming out today from the eurozone.

RoW

The Australian dollar has been weak of late, despite of an improvement in global risk which saw equity markets move higher. Comments from the RBA’s meeting minutes didn’t help the Aussie either, stating that inflation would remain low for some time, limiting the need for an interest rate rise. Chinese GDP data came in just above expectation, printing a positive 6.8%.