Morning Report: 15 December 2015

15th December 2015 By: Ranko Berich

GBP Sterling fell yesterday against both the euro and US dollar after some disappointing housing market data. The Rightmove Price Index, which is a leading indicator of the housing sector’s health, fell for the second consecutive month. This release, coupled with euro strength, sent GBPEUR to its lowest since the end of October. Today is an eventful day in the UK as inflation data is released in many sectors: consumer prices, producers prices, housing prices and retail prices are all released at 09.30 GMT. Today’s releases have the potential to add some strong swings to sterling today ahead of tomorrow releases.

EUR Euro surged yesterday on a very strong industrial production release, which climbed 0.6% in October, doubling expectations and correcting the previous contraction of 0.3%. Mario Draghi, President of the ECB, spoke yesterday in Bologna, Italy. His main contribution to monetary policy was to confirm that further monetary stimulus is still on the table, should inflation levels in the Eurozone require it. Significantly, markets did not react to Draghi’s comments surrounding potential future monetary easing measures, as they were offset by Draghi’s insistence that current policy measures would be enough to bring the Eurozone inflation levels back up to target. Today, the major economic data release is the ZEW economic sentiment indices in Germany, which are considered a key gauge of confidence in Europe’s largest economy.

USD Yesterday was an empty day in terms of macroeconomic data in the US, and the greenback fell against most of the G10 currencies. Today, however, should see more action, with markets positioning themselves ahead of tomorrow’s all-important Federal Reserve announcement on interest rates. Ahead of that, this afternoon inflation data is set to be released in the US. The numbers are expected to show a slight pickup in year on year inflation, although interestingly, the headline numbers remain short of what would traditionally warrant an interest rate hike.

CAD The Canadian dollar remained relatively steady yesterday after the strong drops suffered during the last 10 days. After the OPEC meeting a week ago, where the cartel failed to reach an agreement to control oil production, crude oil prices have fallen more than 12% which prompted a strong depreciation in the loonie. The CAD nonetheless started the week steady and recovered some of its late losses overnight. Today Stephen Poloz, the Governor of the Bank of Canada, is expected to speak in Ottawa regarding the financial system.

UK News

  • FT. Wage growth set to slow next year, think-tank warns: Pay growth in Britain will slow next year unless productivity rebounds strongly, an independent think-tank has warned.
  • FT. Raising minimum wage will cost private-sector employers £1bn: George Osborne’s decision to raise the minimum wage sharply next year will cost private-sector employers about £1bn, according to a watchdog.