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UK “lift-off” delayed and ECB temper optimism

Sterling continued to remain on the back foot as BoE Gov. Carney stated in a keynote speech that interest rates were not going to increase anytime soon. This pushed the UK’s “lift-off” beyond March 2017 according to the pricing in the market. On the positive side we saw some good news from the UK as unemployment fell to a ten year low.

Euro gains continued at the beginning of last week as a flight to safety occurred after the price of oil dropped to twelve year lows, plus concerns of the slowdown of China’s economy had investors buying into the single currency.  However, after a dovish tone, on Thursday the head of the ECB Mario Draghi saw the Euro lose gains which they had seen earlier in the week, as Draghi pointed to the possibility of further QE come March if needed.

Watch our currency round up with Global Reach Partners’ Trader Daniel Stanley, as he reviews last week’s market news:

Monday 25th January 2016

A light start to the week with only the German Ifo Business climate being released this morning. The IFO is a key barometer for confidence within the region as it is based on opinions from manufacturers, builders, wholesalers, and retailers and reviews their six month opinion of the economy. Later this evening ECB President Mario Draghi is speaking in Frankfurt with markets looking for any insight he may give regarding monetary policies and to see if he echoes his dovish stance from last week.

  • German Ifo Business Climate
  • ECB President Mario Draghi Speaks

Tuesday 26th January 2016

Mark Carney the governor of the Bank of England testifies to the treasury select committee about the financial stability report, the market will attempt to decipher for clues of the timing of a UK rate rise. From the US we get an insight into consumer confidence which is expected to slightly increase despite the recent “lift-off” and ongoing speculation of further rate hikes.

  • BOE Mark Carney Speaks
  • US Consumer Confidence

Wednesday 27th January 2016

The biggest day of the week as the FOMC’s first meeting of the year takes place with the rate decision and statement set for release.  As previously stated, the Fed are expected to raise rate four times in 2016, the market will be looking for direction as to when or if these will occur. Market focus will also be on the FOMC’s view on the global economy given the recent turmoil in China.

  • US FOMC Rate decision

Thursday 28th January 2016

The first reading for Q4 GDP from the UK is posted in the morning, with expectations of a slight uptick to 0.5% from 0.4%, given the recent loss of momentum in growth. Sterling has been on the back foot since the beginning of the year, it will be interesting to see how this affects the performance of the currency. Following this, the US core durable goods monthly orders is released just after lunch from the US.

  • Prelim GDP
  • US Core Durable Goods Orders m/m

Friday 29th January 2016

Inflation is once again in the spotlight as the yearly figure is set for release from the Eurozone, forecast to post a slightly better 0.4%. The US then posts their first reading of GDP for Q4 after lunch which is then followed by the Chicago PMI release.

  • Euro CPI Flash Estimate y/y
  • US Advance GDP
  • US Chicago PMI