UK Jobless Rate Remains Unchanged at 6%
Data just released indicated that the unemployment rate in the nation remained at 6% and domestic wage earnings improved more than expected for the three months ended October. Meanwhile, the minutes of the BoE’s latest policy meeting indicated that policymakers remained divided over the central bank’s current stance. However, Sterling showed little reaction to today’s domestic macro updates as investors remained focused on the outcome of the US Fed’s policy meeting scheduled later today. Although the central bank is expected to keep its stance unchanged, traders will eye the post-meeting policy statement for further direction.
Across Europe, today’s first round of Presidential elections in Greece will keep Euro investors on their toes.
Pound Sterling – UK Markets
Data just out revealed that the unemployment rate in the UK remained unchanged for the three months ended October. However, the report indicated that domestic wage earnings improved more than expected, thereby strengthening prospects of a further pickup in domestic spending, particularly after low fuel prices kept disposable income among consumers supported. Separately, the minutes of the BoE’s recent policy meeting revealed that two policymakers continued to vote for an immediate interest rate rise in the UK.
Yesterday, the Pound-US Dollar pair moved above the 1.57 mark, supported by comments from the BoE Governor who indicated that the recent fall in global oil prices would result in a positive outcome for the UK economy. Market participants shrugged off weaker-than-expected UK consumer price inflation data. However, an unexpected easing trend in core consumer price inflation kept investors concerned, especially after the BoE recently warned that Britain’s inflation is expected to fall below the 1% mark, which would obligate the central bank Governor to write a letter to the UK Chancellor.
US Dollar – US Markets
The greenback is trading in a tight range against the majors this morning ahead of the much awaited FOMC meeting in the US scheduled later today. The Fed is anticipated to keep its key interest rate unchanged, however, the focus among market participants is expected to be on the post meeting policy statement to verify if the central bank drops the “considerable time” language from its publication. The policy statement will be accompanied by the central bank’s economic projections which will be eyed for more clarity on the nation’s economic health, especially after economic growth numbers for the last two quarters surpassed market estimates. These two crucial publications from the Fed will provide investors with a better insight into the timing of an interest rate rise in the US. Also, traders will eye the US inflation report which is expected to show an easing trend for November.
In yesterday’s trading session, the greenback remained under pressure against its key peers after the preliminary Markit manufacturing PMI survey in the US indicated that the pace of activity slowed for December to its lowest level since February 2014.
Euro – European Markets
The Euro is trading in a tight range against the majors this morning ahead of the revised consumer price inflation data in the Euro zone, which is expected to match the preliminary estimate for November. However, with crucial events like the FOMC meeting in the US and the first round of the Greek Presidential elections scheduled later today, the common currency is likely to witness some volatility against its major peers in the latter half of the trading session.
The single currency gained ground against the greenback in yesterday’s trading session following the release of mostly upbeat macro updates in the Euro zone. The preliminary Markit survey showed a more than expected improvement in the Euro zone’s manufacturing and services PMI readings for December, thereby raising hopes that the downward macro trend in the region is weakening. Additionally, the ZEW survey released in Germany showed a more than expected improvement in investor sentiment as they regained confidence in the economy’s performance going forward amid a weaker Euro and falling global crude oil prices.
Other Currencies – Highlights
The Japanese Yen showed little reaction to the domestic trade data released overnight. The report revealed that total merchandise trade deficit in Japan narrowed unexpectedly for November, although export growth from the nation remained weaker than expected. However, a drop in imports, mainly led by a fall in global crude oil prices, resulted in Japan’s trade deficit narrowing last month.
With no other important macro updates scheduled in Japan today, the Yen is expected to remain supported against its high yield counterparts, especially amid signs of economic turmoil in Russia and uncertainty surrounding the first round of Presidential elections in Greece. Additionally, market participants will keenly eye the FOMC meeting in the US scheduled later today for further direction to the Japanese Yen against the greenback. Going forward, the Bank of Japan’s monetary policy statement scheduled later this week will be eyed to gain an insight into the central bank’s policy stance going forward, especially considering the recent implementation of additional stimulus measures in the nation.