Dollar continues its poor form

  • UK Average Earnings Index 3m/y: 3.0%
  • UK Claimant Count Change: 4.6K
  • UK Unemployment Rate: 5.4%
  • US Core Retail Sales m/m: -0.3%
  • US PPI m/m: -0.5%
  • US Retail Sales m/m: 0.1%
  • AUD Employment Change: -5.1K
  • AUD Unemployment Rate: 6.2%

Sterling was boosted yesterday after the release of the unemployment data despite being mixed. Several components of the labour sector were released with the headline unemployment rate dropping to 5.4% from 5.5%  which is a fresh 7 year low. In addition, the number in work rose by 140,000, bringing the employment rate to 73.6% - the highest rate since records began in 1971. However, average earnings missed expectations and jobless claims increased. As stated a mixed picture but overall positive for the UK economy. With inflation bumping along the bottom and being heavily influenced by the annualised decline in the price of oil, it is no surprise that the market is looking to the employment data for clues on monetary policy.

Crossing the pond, there has been some fairly dovish comments from Fed officials. Fed Governor Tarullo addressed the market this week and said “Right now, my expectation is - given where I think the economy would go - I wouldn't expect it would be appropriate to raise rates.” Bolstering the markets view that the Fed will not raise rates this year and spurring Dollar weakness throughout the day yesterday. On other news, US data continued its poor run, with retail sales and PPI failing to meet market expectations. Retail sales posted a 0.1%, whilst PPI registered its worst reading since February at -0.5%, adding to the Dollar depreciation that occurred yesterday.

  • US CPI m/m
  • US Core CPI m/m
  • US Unemployment Claims
  • US Empire State Manufacturing Index
  • US Philly Fed Manufacturing Index
  • FOMC Member Dudley Speaks
  • US Crude Oil Inventories
  • NZD CPI q/q

US inflation pressures remain low, with economists’ forecasting a -0.2% reading month-on-month for the consumer price index. Falling energy prices continues to post soft readings, contributing to the expected deflation last month. Also Thursday, FOMC member Dudley is scheduled to speak. Despite the Fed’s recent rhetoric which includes downplaying the weak September employment report, markets remain unconvinced of the likelihood of lift-off in December this year, with many institutions forecasting a rate hike as late as March next year.