Non Farms bearish and Carney hawkish

The US labour market and Bank of England inflation report were the markets main concern last week. Volatility was high last week and the Greenback has dropped broadly, with a correction still ongoing as markets began to price in less Fed rate hikes this year. 

Non-farm pay rolls released on Friday disappointed with a five month low of 158k, missing economists’ consensus of 180k. The previous figure was also revised lower by 30k. However, unemployment in the US unexpectedly dropped to 4.9%, a level last seen in March 2008. Although the NFP failed to meet market expectations it still posted a healthy pace of expansion. With nearly an eight year low unemployment rate the overall sentiment shows signs of a resilient labour market. 

The Bank of England released their quarterly inflation report, followed by an interest rate vote and Mark Carney press conference last Thursday. BoE Governor Carney cited a turbulent global economy as the BoE cut its inflation forecast once again and the sole policy maker who had been calling for higher interest rates changed his mind. The vote is now a unanimous 9-0 in favour of rates to remain at record lows. However, Carney addressed the market in a relatively hawkish tone as he stated that “all MPC members believe the next likely move in rates is up” and that “despite prospects of an EU referendum this year, household and business confidence remains robust”. GBP/USD traced higher in the aftermath of the Bank of England announcements. 

Today 

Monday’s economic calendar is light as we start the week with relatively tame data. The world’s second biggest economy; China is closed in observance of the Spring Festival starting today until Friday the 12th February. 

  • Chinese Bank Holiday

Tuesday 

No high tier data is released but the Trade Balance is scheduled from the UK, where the difference of imports and exports are expected to decrease. From the US, we have the release of further labour data as Jolts job openings is posted. 

  • UK Trade balance 
  • US JOLTS job openings

Wednesday 

After the BoE meeting last week and the inflation report which was on the dovish side, today sees the release of manufacturing and industrial monthly production figures. This will be watched to gauge if there are still signs of a slowdown being felt at the start of 2016 for the UK. Focus will turn to the US again, as Fed Chair Janet Yellen testifies on the Semi-annual monetary policy before the Senate Banking Committee, in Washington. Further indicators will be watched to see whether there is any rhetoric on further rate increases for this year. 

  • UK Manufacturing Production 
  • Fed Chari Yellen Testifies

Thursday 

Today’s economic docket is relatively quiet. We do however have a high tier piece of labour data from the world’s biggest economy; the US. The weekly Jobless claims figure is forecast this afternoon to tick slightly higher from its previous to 287k. Fed Chair Janet Yellen is also scheduled to testify on the Semi-annual Monetary policy report before the Senate Banking Committee later this afternoon. Rhetoric is expected to be similar to yesterday’s Fed comments. 

  • US Unemployment Claims 
  • Fed Chair Yellen Testifies 

Friday 

The Eurozone will post their first reading of Q4 GDP, where growth is expected to remain at 0.3%.  Following this, in the afternoon the Retail Sales figures from the US is set to hit the wires, where the main gauge is fore-cast to post a positive reading. 

  • Eurozone GDP 
  • US Retail Sales 
  • US University of Michigan Consumer Sentiment