UK unemployment beat expectations by falling to 3.8% in the three months to September, but the jobless claimant count was higher than forecast at 33,000 and employment declined by 58,000 in the 3-month period. Earnings growth slowed to 3.6% from 3.8% for the year, in line with the Bank of England forecasts. As markets had expected a sharper employment fall the Pound was resilient and there were no major political developments; opinion polls still indicating a healthy Conservative lead.
Sterling edged up in the afternoon on expectations that a Conservative government majority would mean the latest Brexit deal would be approved. The Pound rose to 1.2850 against the Dollar while the Euro dropped to 1.1680, 6-month lows. Sterling is little changed this morning as we await the latest inflation data.
The US NFIB small-business confidence index bolstered slightly to 102.4 from 101.8 previously with a stronger tone in capital spending whilst companies continued to report labour shortages. Richmond Fed President Barkin stated monetary policy is mildly accommodative after the rate cuts this year. Dallas head Harker stated voiced that he was against the October rate cut while Minneapolis President Kashkari also voiced that he was feeling marginally better about the economy than a few months ago, sustaining expectations of no December rate cut. The Dollar held a concrete tone with an absence of interest in other major currencies as the Euro also dipped to near 1.1000.
Markets are currently on standby for the US CPI data and testimony from Fed Chair Powell out later today.
The German ZEW business confidence index strengthened to a 6-month high of -2.1 for October from -22.8 and above consensus expectations of -13.0. The Euro-zone index strengthened to -1.0 from -23.5 with confidence boosted by expectations that the international economic environment could well improve.
The Euro failed, however to make any significant headway despite the improved data releases as ECB rhetoric remained dovish. Vice President de Guindos stated that the bank had most definitely not exhausted all options and the real threat at present is a longer phase of lower than expected growth. The common currency was also hampered by Spanish political concerns following reports that the Socialist Party and Podemos had reached a potential coalition deal which could trigger tensions with the EU.
As of writing, the Euro is trading at the 1.0994 against the Dollar.
Data to watch
09:30 - GBP - CPI
13:30 - USD - CPI
13:30 - USD - Core CPI
16:00 - USD - Fed Chair Powell Testifies
Posted in Daily Market News on Nov 13 2019