UK data bucks the trend

Yesterday’s markets

8th October 2015

  • BoJ Press Conference
  • UK Manufacturing Production m/m: 0.5%
  • CAD Building Permits m/m: -3.7%
  • UK NIESR GDP Estimate: 0.5%
  • US Crude Oil Inventories: 3.1M
  • JPY Core Machinery Orders m/m: -5.7%
  • JPY Current Account: 1.59T

Lately data from the UK has been slightly disappointing as the service sector data missed expectations earlier in the week putting some question marks around growth. However, Sterling rose to its highest level in two weeks against the US Dollar after UK manufacturing picked up in August after a July slump. The increase is largely due to the car plants that came back online after summer shutdowns.

Looking at corporate M&A activity that could affect the performance of Sterling, it should be noted that the UK’s SABMiller has rejected an improved offer from Anheuser-Busch InBev. It has been stated that the offer  "very substantially undervalues" its business. It is likely that there will be a revised offer in the near future.

Meanwhile, the single currency fell against most major counterparts after data showed German industrial production unexpectedly declined in August. This decline is adding to signs that weaker emerging-market demand is weighing on Europe’s largest economy. With the slowdown from emerging markets evident causing strain on low inflation, speculation continues to grow that the European Central Bank could be forced to expand its quantitative-easing program. 

Today’s markets

7th October 2015

  • UK MOC Official Bank Rate Votes
  • UK Monetary Policy Summary
  • UK Official Bank Rate
  • UK Asset Purchase Facility Votes
  • EUR ECB Monetary Policy Meeting Accounts
  • US Unemployment Claims
  • UK BoE Gov Carney Speaks
  • FOMC Meeting Minutes
  • AUD Home Loans m/m

Today is arguably the biggest day of the week in terms of data as the markets gain an insight into both the UK and US interest rate plans. Firstly, the Bank of England voted 8-1 in favour of keeping rates at record lows last month. The MPC despite the slowdown in China and emerging economies remain upbeat about the UK economy and the bank is expected to raise rates starting from the first half of 2016. Meanwhile, the FOMC September minutes set for release on Thursday evening. Fed Chair Yellen and her colleagues refrained from hiking in September and now we will gain further insight into their rate rise plans, especially the expectations towards the December decision.