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May's comments continue to dominate market movement

  • GBP - Average Earnings Index 3m/y: 2.8%
  • GBP - Claimant Count Change: -10.1K
  • USD - CPI m/m: 0.3%
  • USD - Core CPI m/m: 0.2%
  • CAD - BOC Monetary Policy Report
  • CAD - BOC Rate Statement

Prime Minister Theresa May’s Brexit comments continued to be the main topic of conversation yesterday. Economists’ optimism soon changed to pessimism as May’s comments were digested further. Sterling fell 1% against the Greenback and 0.5% against the Euro throughout yesterday’s European session. Major banks weighed in on their plans after the speech, with UBS suggesting they will have to move employees from London. HSBC also commented that operations generating about 20% of revenue may have to move to Paris. These comments, coupled with profit taking from Tuesday’s large gain against the Dollar, contributed to the weaker Pound trend seen yesterday.

Yesterday’s economic docket was jam packed with high tier data. Firstly, markets gained an insight into the UK’s labour market. Overall the data was positive, with unemployment remaining at 4.8% (its lowest level in 11 years), whilst average earnings and the claimant count both exceeded market expectations. In the afternoon, the US released a key piece of inflation data. US CPI was in line with the economists’ consensus at 0.3% for the month and therefore 2.1% year on year.

  • EUR - Minimum Bid Rate
  • CAD - Manufacturing Sales m/m
  • EUR - ECB Press Conference
  • USD - Building Permits
  • USD - Philly Fed Manufacturing Index
  • USD - Unemployment Claims

The ECB are releasing their rate decision followed by the press conference where Mario Draghi, the Head of the ECB will give details on monetary policy plans and then answer questions.  As inflation is moving in the right direction and growth holding steady no change in policy is expected.  The US building permits are set to show a slight increase, as is the housing starts market.

Have a good day.