The just released labour market data showed that wage growth for the three months to May accelerated by the most in five years, while the jobless rate unexpectedly rose to 5.6%. The BoE is expected to take a note of the rise in wage earnings in its upcoming monetary policy meeting, especially after the BoE Governor yesterday indicated that the time for a rate increase is inching closer.

Across the Atlantic, the Fed Chairperson Janet Yellen will begin the two day semi-annual testimony to Congress later today. Though no change is expected in the policy stance, investors will look for hints on the timing of a rate rise. In Europe, today’s Greek Parliament vote on the crucial bailout deal will be noted.

Pound Sterling – UK Markets

The just released job market data showed that average weekly pay, including bonuses, in the UK rose at the fastest pace in more than five years for the three months period until May, though slightly below market estimates. Meanwhile, the unemployment rate unexpectedly ticked higher to 5.6% for the first time in more than two years. Today’s mixed employment figures and the absence of any price pressures in the economy is unlikely to encourage the BoE to implement a change in its policy stance in the near term. However, the just out economic releases had a limited impact on the Pound, as it continues to trade in a narrow range against the US Dollar.

Yesterday, Sterling moved above the 1.55 mark against the US Dollar after the BoE Governor Mark Carney stated that the time for an interest rate rise was inching closer, given the current domestic and global macro economic conditions. However, he reiterated that the pace of rate rises will be gradual. The remarks came after UK CPI data showed that consumer prices stagnated in June.

US Dollar – US Markets

The US Dollar retreated from its early session gains against the Euro yesterday after data showed that June retail sales slipped to post the weakest reading since February, as households held back their purchases of automobiles and other goods, stoking concerns that the US economy might have lost momentum at the end of the second quarter. The disappointing retail sales figures, along with somewhat softer than anticipated payrolls recently, has slightly dampened expectations of an interest rate rise in the near term.

Meanwhile, today’s manufacturing update from the New York Fed and industrial output data will offer fresh perspective about the health of the economy. Markets anticipate that today’s figures will show manufacturing activity rebounded in New York, while industrial production is anticipated to show that the recent slowdown in the sector has run its course. Following the economic releases, investors will monitor Fed Chairperson Janet Yellen’s semi-annual monetary-policy testimony in which she is likely to reinforce the message that the Fed’s pace of tightening is expected to be gradual.

Euro – European Markets

The Euro is trading moderately higher against its major currency counterparts this morning. With little on the economic data front, investors will continue to track news from Greece for direction in the currency pair. The cash strapped nation has until today to get a parliamentary vote on a raft of austerity measures agreed upon by Greece and European officials earlier this week. Meanwhile, an IMF report yesterday indicated that Greece's finances were worse than previously estimated, highlighting the extent of debt burden the nation is bearing. In economic news, data released earlier today showed that inflationary pressures in the Euro zone’s second largest economy have softened.

Hopes for acceleration in Euro zone economic growth during the second quarter were dealt a blow yesterday after the region’s industrial production data showed a contraction for May. Additionally, the ZEW survey showed that investor sentiment in Germany and Euro zone dampened for July, amid the ongoing turmoil in Greece.

Other Currencies – Highlights

The Japanese Yen showed little reaction against the US Dollar earlier today, following the release of the Bank of Japan’s monetary policy statement which revealed that the central bank maintained its asset purchase programme at an annual pace of JPY80 trillion. Meanwhile, the BoJ slashed its growth projection for the current fiscal year to March 2016 to 1.7% and also trimmed its inflation estimate for fiscal 2016 and fiscal 2017. However, at the press conference, the BoJ Governor expressed confidence about the economic recovery and indicated that a pickup in consumption will help accelerate inflation towards the central bank’s desired target. He also added that the recent slowdown in production and exports were temporary, primarily led by the weakness in external demand.

Looking ahead, market participants will shift their focus towards the US Fed Chairwoman, Janet Yellen’s semi-annual monetary policy testimony along with a set of US economic releases including industrial production, producer prices and the latest update on MBA mortgage applications, scheduled later today, for direction.