Morning Report: 12 November 2015

12th November 2015 By: Ranko Berich

GBP Sterling strengthened yesterday, as G10 FX struck a largely cautious tone, with the majority of pairs remaining well within their recent trading ranges, especially EURUSD, GBPUSD and EURGBP. The caution may, in part, have been due to the fact that this week has seen little high impact data apart from yesterday’s Labour Market statistics from the United Kingdom. The data showed that the UK labour market was still adding jobs and experiencing very encouraging increases in wages, with the trend on wage growth clearly showing acceleration. The Unemployment Rate also dropped to 5.3%, the lowest since the spring of 2008. In the meantime, the Bank of England’s first Open Forum passed largely without event for sterling, with most of the discussion focussing on market regulation and other non-monetary issues. Today at 17:00 GMT, dovish Bank of England Chief Economist Andy Haldane will speak.

EUR The euro has woken up to a hammering this morning off the back of comments from the European Central Bank’s Mario Draghi. Draghi, speaking to European Lawmakers, said that the downside risks to inflation in the eurozone had increased and that QE could be extended past September 2016 if necessary. These statements are hardly new, and yet the famed “Draghi effect” has seen the euro fall nonetheless. Later this morning at 10:00 GMT, Eurozone Industrial Production data will be released.

USD The US dollar performed well overnight, gaining some ground vs most of the G10 with the only notable losses coming against the Australian dollar, which saw impressive gains after some very strong labour market data. This afternoon will see nothing short of an all-out talking offensive from the US Federal Reserve, with speeches from no less than four voting Federal Open Market Committee members. Fed Chair Janet Yellen is up first at 14:30 GMT, followed at 15:15 by Charles Evans, at 17:15 by the New York Fed’s Bill Dudley, and at 23:00 by Stanley Fischer. Normally out of four central banker speeches, at least one or two will be on topics periphery to the macro economy and therefore monetary policy and currency. Not so today- all four Fed speakers will discuss topics likely to reveal their opinions on monetary policy. This will be an important afternoon for the greenback, especially considering Yellen and Dudley are influential centrists, and Evans is a notable dove who has previously been averse to raising rates early. In addition to the Fed speakers, weekly Unemployment Claims will be released at 13:30 GMT, followed at 15:00 GMT by the Job Openings and Labour Turnover Summary.

CAD After at first staging a recovery in the early hours of this morning, CAD has since again weakened to USD, continuing a rather uneventful week that has so far seen the pair drift only slightly downwards. Today at 13:30 GMT the New House Price Index will be released.

UK News

  • Reuters. UK house price growth picks up steam in October: British house price growth accelerated in October, fueled once again by a shortage of new homes coming to the market, a body representing property valuers said on Thursday.
  • FT. Jobs data give Bank of England leverage to keep rates low: Britain’s jobs-rich recovery has pushed down unemployment to the lowest in seven years, but slightly slower wage growth means the Bank of England still has breathing room to hold interest rates at their record lows.