The slightly stronger than expected October GDP data provided an element of Sterling support, although there were still important reservations surrounding the outlook with expectations that the economy was already close to recession and vulnerable to a further slide after the new-year period with a sharp retrenchment in consumer spending. Sterling overall was again resilient with further evidence of a covering of short positions into the year-end period and some expectations that a lot of bad news surrounding the economy had been priced in. UK labour-market data recorded a slight increase in the unemployment rate to 3.7% from 3.6%, but with a further increase in employment as the inactivity rate declined. Overall earnings growth increased slightly to 6.1% from 6.0%, but marginally below expectations.
Key Data
7.00 Claimant Count Change Act. 30.5K Exp. -13.3K Prev. -6.4K
7.00 ILO Unemployment Rate Act. 3.7% Exp. 3.7% Prev. 3.7%
11.00 Andrew Bailey Speech
The Euro held a firm tone after the European open on Monday. There were no significant data releases during the day with further position adjustment ahead of key central bank policy decisions this week. Euro-Zone equities were unable to make headway during the day which hampered and there were still concerns over energy costs despite a slight retreat in gas prices during the day.
Key Data
7.00 German Harmonised Index of Consumer Prices (YoY) (Nov) Act. 11.3% Exp. 11.3% Prev. 11.3%
Ahead of the key interest rate decisions this week, the latest US consumer prices data on Tuesday will be very important for market sentiment. Consensus forecasts are for the headline rate to decline to 7.3% from 7.7% the previous month with the underlying rate expected to dip to 6.1% from 6.3%. In line or softer than data for the month would boost optimism over peak inflation and underpin risk appetite with net dollar losses while stronger than expected data would increase inflation fears and potentially strengthen the dollar, although there will inevitably be high volatility, especially with the Fed decision on Wednesday.
Key Data
13.30 Consumer Price Index ex Food & Energy (MoM) (Nov) Exp. 0.3% Prev. 0.3%
13.30 Consumer Price Index ex Food & Energy (YoY) (Nov) Exp. 6.1% Prev. 6.3%