Sterling bolstered as unemployment falls to a 42 year low

Yesterday’s markets

13th July 2017

  • GBP - Average Earnings Index 3m/y: 1.8%
  • USD - Crude Oil Inventories:  -7.6M
  • CAD - BOC Monetary Policy Report

UK unemployment and average earning data was released yesterday morning with most data being better than anticipated. Average earnings of UK households were exactly as expected, although slightly less than previous results. The unemployment rate, however, was much better than expected, with less people claiming benefits and more in jobs.

Due to these overall better than expected results, Sterling spiked and slightly recovered off the back of this. However, the disappointing average earnings may have a negative impact on consumer spending.

Federal Reserve Chair, Janet Yellen, signalled the Fed would not rush into tightening the monetary policy as she testified before the House of Financial Service Committee yesterday. She mentioned the economy is steady enough for further rate hikes, however, they will not need to raise rates ‘all that much further’ to reach a neutral level. Yellen remains cautious on the inflation outlook, but said it was too premature to yet say inflation would not reach 2% in the coming years. Due to Yellen’s dovish tones, Dollar fell yesterday against other major currencies, whilst the Dollar Spot Index fell to the lowest level since September. 

Today’s markets

12th July 2017

  • USD - PPI m/m
  • USD - Unemployment Claims
  • USD - Fed Chair Yellen Testifies

Today starts with the release of the final CPI figures from both Germany and France whilst the UK will release the BOE credit conditions survey. Across the pond, the PPI and weekly employment claims figure will be released. PPI is expected to remain sticky at zero percent. Fed Chair, Janet Yellen, will continue her second day of testimony to congress whilst two FOMC members will be speaking. Charles Evans will be speaking about the economy and monetary policy at the Ninth Annual Rocky Mountain Economic Summit and Lael Brainard will be speaking at the National Bureau of Economic Research. Audience questions are expected at both.