Morning Report: 14 December 2015

14th December 2015 By: Ranko Berich

GBP Sterling’s most noticeable trend last week was its solid upwards path against the US dollar, which saw it recover almost 2% against the greenback over the course of the week. Last week’s Bank of England meeting minutes and policy summary did little to help sterling along, but this week’s fundamental data will be worth watching. Inflation data including the official Consumer Price Index, House Price Index, and Producer Price Index will be about tomorrow at 09:30 GMT, accompanied by a speech from the BoE’s Chief Economist, Andy Haldane. Labour Market data, most notably the Average Earnings Index and Unemployment Rate, will be released on Wednesday. Today, the BoE’s Minouche Shafik will speak at midday at the Institute of Directors, in London.

EUR The euro’s momentum appears to be slowing this morning, after a week of solid gains across the board. The main reason for the single currency’s appreciation was the European Central Bank’s smaller than expected deposit rate cut at this month’s meeting. The ECB seems confident it’s present stimulus will bring inflation to target based on current projections of growth. This week’s data will be a good test of if businesses in the eurozone are equally confident, with a number of major surveys due to be released. ZEW Economic Sentiment will be released tomorrow, followed by Flash Services and Manufacturing Purchasing Managers Indices on Wednesday and IFO German Business Climate on Thursday. Today at 10:00 GMT, Industrial Production data will be released, followed by a speech from the European Central Bank’s Mario Draghi at 11:00.

USD This will be a crucial week for the US dollar as the US Federal Reserve meets ahead of announcing its latest rate decision on Wednesday at 19:00 GMT. Expectations are very high, after a majority of speakers from the Federal Reserve have indicated they are willing to raise rates at this meeting. Any hesitance, half measures or delay on the part of the Fed could have volatile consequences in the markets, as this month’s European Central Bank press conference proved. In the meantime, the latest inflation data will be releasedtomorrow at 13:30 GMT.

CAD The loonie took a hammering last week, as crude oil prices fell, and fell, and kept on falling. The implications of OPEC’s latest decision not to restrict supply appear to be fully sinking in, and the small rallies that have been seen in crude oil over the last week have been short lived. This week, Manufacturing Sales data will be released on Tuesday and Bank of Canada Governor Stephen Poloz will speak that day. Later in the week, inflation data will be released on Friday.

UK News

  • Reuters.  IMF warns UK growth could suffer due to EU vote: Uncertainty about the outcome of Britain’s referendum on leaving the European Union could cloud an otherwise positive outlook for the country’s economic growth, the International Monetary Fund said on Friday.
  • Daily Mail. Average UK house price predicted to push well over £300,000 mark by end of 2016 having risen by £20,000 over past year: Asking prices for UK homes have ended the year nearly £20,000 higher than when 2015 started, according to property website Rightmove, and it predicts that in a year’s time asking prices will be another £17,000 higher than they are now.