A divided Fed sees the Greenback slip

Yesterday’s markets

18th August 2016

  • GBP Average Earnings Index 3m/y: 2.4%
  • GBP Claimant Count Change: -8.6K
  • GBP Unemployment Rate: 4.9%
  • USD Crude Oil Inventories: -2.5M
  • USD FOMC Meeting Minutes
  • AUD Employment Change: 26.2K
  • AUD Unemployment Rate: 5.7%

The Federal Reserve minutes dominated headlines yesterday, however before this release we had a raft of high tier post- Brexit UK labour data which dictated price action during the European session. The UK jobs market showed resilience yesterday as companies added 172k jobs in the second quarter and the unemployment rate held at 4.9%. The claimaint count change dropped to -8.6k, adding to the better than expected figures. The data showed that Britain’s labour market is not cracking under the weight of Brexit just yet. Sterling ticked higher across the board after these releases.

The Federal Reserve released July’s meeting minutes yesterday. Earlier this week, New York Federal Reserve Bank President William Dudley helped push the Greenback higher after hawkish comments regarding the US economic performance and suggesting that a September rate rise is still on the cards.  However the release of the minutes from the FOMC meeting in July showed that there was a clear divide between the policy makers, with some feeling that economic conditions would soon warrant action, others were of the opinion that more positive data was needed before another step is to be taken.  With markets looking for further insight into when the Fed will raise rates again this year, it is looking slightly clearer that September could now be well off the cards, and with November being a write off of any action being implemented due to the election, it just leaves December as the last possible chance of anything being done this year.

Today’s markets

17th August 2016

  • GBP Retail Sales m/m
  • EUR Final CPI y/y
  • EUR ECB Monetary Policy Meeting Accounts
  • USD Philly Fed Manufacturing Index
  • USD Unemployment Claims
  • USD FOMC Member Dudley Speaks

Retail sales for the month comes into focus from the UK as a disappointing figure of -0.9% was seen last time out, this latest reading is expected to show a gradual improvement of 0.1% for July.  Further inflation figures are seen this time from the Eurozone where the ECB are trying to tackle the constant deflationary price pressures seen, the yearly figure is due to stay at 0.2%.