Sterling depreciates after poor manufacturing reading

Yesterday’s markets

9th December 2015

  • GBP Halifax HPI m/m: -0.2%
  • GBP Manufacturing Production m/m: -0.4%
  • EUR ECOFIN Meetings
  • CAD Building Permits m/m: 9.1%
  • GBP NIESR GDP Estimate: 0.6%
  • USD JOLTS Job Openings: 5.38M
  • AUD Westpac Consumer Sentiment: -0.8%
  • JPY Core Machinery Orders m/m: 10.7%
  • CNY CPI y/y: 1.5%

Sterling was once again on the back foot yesterday morning as data continued to disappoint and suggested the slowdown is gaining momentum. Manufacturing output in the UK fell by 0.4% in October from the previous month. Adding to the poor data was November's Black Friday sales which failed to boost turnover at UK stores according to the British Retail Consortium (BRC) and accountants KPMG. Sales in November at stores open for more than a year fell 0.4% from the same month in 2014. Again this creates further question marks around timing of a UK rate hike in comparison to the US.

The number of US job openings in October edged down to 5.4m in October from 5.5m the month before, according to the jobs and labor turnover report (Jolts). An important gauge of worker confidence also showed little changed. The quits rate, the number of quits as a percentage of total employment, has been 1.9 per cent for the last seven months – it has been steadily gaining ground since hitting a trough of 1.3 per cent in 2010. The quit  rate is monitored as it shows the confidence of leavers getting another job. Federal Reserve chair Janet Yellen strongly signalled that the central bank was on course to raise interest rates for the first time since 2006 at its December meeting, provided there were no surprises in economic data. Despite missing forecast it is still a solid number.

Overnight, China released another piece of high tier data this week. China’s consumer inflation rate rose in November, as higher food, consumer and property prices suggested that Beijing’s bid to spur growth in the world’s second-largest economy is having some effect. China’s consumer-price index rose 1.5% in November from a year earlier, an increase from its 1.3% rise in October.

Today’s markets

8th December 2015

  • NZD Official Cash Rate
  • NZD RBNZ Rate Statement
  • NZD RBNZ Monetary Policy Statement
  • NZD RBNZ Press Conference
  • AUD Employment Change
  • AUD Unemployment Rate

The docket is very light today but the focus will be on the crude oil inventories. After the collapse in oil prices this year and its recent move below $40 per barrel, the inventories will be watched to see how much oil is being held, which could in turn have an effect on price. Meanwhile the RBNZ will be releasing the latest decision on interest rates. It is expected that the central bank will cut rates by 0.25%.