Data just released has indicated that the construction output in the UK rose less than anticipated, raising fears that growth could be slowing. Investors now await the crucial consumer price inflation numbers next week, particularly considering the dovish tone of the BoE’s latest quarterly inflation bulletin.

Across the Atlantic, after yesterday’s upbeat retail sales report in the US showed that domestic spending remained well supported last month, traders will eye today’s preliminary Reuters/Michigan consumer confidence reading later today to gain a better insight into consumer spending for the final quarter of 2014. Meanwhile, in the Euro zone, yesterday’s weaker than expected response to the ECB’s TLTRO auction strengthened prospects of an outright bond purchase programme.

Pound Sterling – UK Markets

The construction output report has shown that the pace of growth in this sector slowed for October. However, today’s data was not surprising, especially after the Markit survey had indicated a similar deceleration in the nation’s construction sector for October. Later today, the flash Reuters/Michigan consumer confidence survey in the US is expected to attract considerable attention among investors in the Pound-US Dollar pair. Moving ahead, market participants will eye next week’s consumer price inflation data in the UK to gauge the downside risks for inflation, particularly after the BoE indicated that Britain’s inflation is anticipated to fall below 1% in the coming six months. Additionally, traders will eye the minutes of the BoE’s latest policy meeting and the UK labour market data next week.

The Pound recovered its early session losses against the greenback in yesterday’s trading session and climbed back above the 1.57 mark, despite the release of robust macro data in the US.

US Dollar – US Markets

The greenback gained ground against the Euro yesterday following the release of upbeat US economic data. The weekly labour market survey revealed that the number of initial jobless claimants in the US decreased more than expected for the previous week and fuelled hopes that the recent robust job additions would continue. Another report showed that retail sales in the US rose more than anticipated for November, despite disappointing Black Friday sales last month. The report further indicated that consumer spending in the US was well supported and evenly spread throughout the month amid the recent fall in global energy prices. Going forward, market participants will eye today’s preliminary consumer confidence Reuters/Michigan print for December to better gauge the health of consumer spending for the last quarter in the US, especially considering its strong influence on the nation’s GDP data.

The US Dollar is trading in a tight range against its major peers this morning. The US producer price inflation figure scheduled later today is expected to provide investors an early insight into next week’s crucial consumer price inflation data.

Euro – European Markets

Data released earlier today showed that German wholesale price inflation for November posted its highest drop in the last seven months and fuelled renewed deflationary fears in the Euro zone. Market participants will keep a tab on the Euro zone’s industrial production data later today which is expected to show a slight improvement in the region’s pace of industrial activity for October. Going forward, next week’s preliminary manufacturing and services PMI numbers for December across key European nations are likely to attract significant attention among investors.

In yesterday’s trading session, the common currency lost major ground against the greenback and the Pound and dropped below the 1.24 and 0.79 levels, respectively, following a weaker than expected response to the ECB’s TLTRO auctions. As both TLTRO auctions held this year have failed to expand the ECB’s balance sheet as per its predetermine targets, prospects of a sovereign bond purchase programme in the Euro zone early next year cannot be ruled out.

Other Currencies – Highlights

The Canadian Dollar lost sharp ground against the greenback in yesterday’s trading session following the release of upbeat retail sales and initial jobless claims data in the US. Meanwhile, the BoC Governor, Stephen Poloz, stated that the central bank expects to hold its current policy stance for some time as the Canadian economy still remains vulnerable to external headwinds. Additionally, he indicated that while there are signs of a pickup in exports, business investment and job creation, the Canadian economy is expected to take another couple of years to achieve steady growth with inflation on target.

The Canadian Dollar is trading in a tight range against the greenback today. With little on the domestic macroeconomic front, market participants will eye the preliminary Reuters/Michigan consumer sentiment survey later today for further direction. Considering the close correlation between crude prices and the Canadian Dollar, the recent drop in global oil prices is likely to keep the Canadian Dollar broadly under pressure against the majors.