UK unemployment gives the Pound some much needed support

All WEF Annual Meetings
GBP Average Earnings Index 3m/y: 2.0%
GBP Claimant Count Change: -4.3K
GBP Unemployment Rate: 5.1%
CAD Manufacturing Sales m/m: 1.0%
CAD Wholesale Sales m/m: 1.8%
USD Building Permits: 1.23M
USD CPI m/m: -0.1%
USD Core CPI m/m: 0.1%

UK labour and US inflation data were the main focus of yesterday. Unemployment in the UK unexpectedly fell to the lowest level in almost a decade, with wage growth dampening the good news by posting a worse than forecast figure. Unemployment in the UK is now at 5.1% as the labour market continues to strengthen. The good news helped the Pound recover some of its earlier week losses after Carney’s dovish comments sent the currency tumbling Tuesday.

Across the pond, the US posted its monthly CPI figure, giving markets an insight into the world’s largest economy’s inflation data. CPI prices in the US fell in December as the cost of energy goods dropped and prices for a range of services rose moderately. If this trend continues it could suggest that there will be a further delay that CPI will reach the Fed’s 2% target. CPI posted a -0.1%, its worst reading in four months.

All WEF Annual Meetings
EUR Minimum Bid Rate
EUR ECB Press Conference
USD Philly Fed Manufacturing Index
USD Unemployment Claims
USD Crude Oil Inventories

Given the recent strength in the single currency, the market will keep a close eye on the ECB meeting today. It has been recently reported that several members of the governing council do not believe that deployment of further monetary policy tools will be required given the improvements in the economy. The market will decipher the rhetoric for clues on course of policy action moving forward.