Monthly Archives: January 2024

Pound Hits 3-Year High vs Dollar as US Slowdown Fears Mount
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Money News Overview Friday 12th January 2024: The US CPI prints higher than projected

Headline CPI inflation in the United States increased to 3.4% in December, surpassing the 3.2% consensus and up from 3.1% in November.

Core CPI, on the other hand, came in above the expectation of 3.8% but decreased marginally to 3.9% from 4%. Despite evidence indicating that inflation is somewhat persistent in the States.

The major currency pairs have remained range-bound. The dollar rebounded from its previous day’s losses, gaining somewhat during the European session. However, as interest rates fell overnight, the dollar lost some of its gains.

Already today, the November assessment of UK GDP was slightly higher than projected, climbing by 0.3% month on month. However, the data had no effect on sterling in early trading.

The final readings of French and Spanish HICP inflation for December are due later today. However, barring any significant changes, the figures are unlikely to have an impact on the euro.

UK inflation surprise
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Money News Overview Thursday 11th January 2024: The US CPI forecasted to rise

Today, the economic market calendar is dominated by US Consumer Price Index releases.

Also in the US we have the headline US inflation figure whereby this is set to increase to 3.2 percent (+0.1% forecast). Core inflation which excludes food and energy prices, is expected to ease to 3.8 percent in December (-0.2% forecast).

Lastly in terms of data for the US, we cap of the day with the unemployment claims that are forecasted to come in at 210k which is above the market consensus of 202k.

 For the UK, the Bank of England’s comments supported the Pound yesterday. Bank of England Governor ‘Andrew Bailey’ confirmed that the outlook remained firm and holding interest rates at 5.25% will help bring inflation down to the target level of 2 percent.

UK Gross Domestic Product and Industrial Production figures are set to be released tomorrow morning. Both sets of figures are anticipated to improve from December and show the UK economy is improving.

The Pound has been trading in a tight range this week against the Euro within 0.3 percent. Against the Dollar, GBPUSD is currently at its highest level since late December.

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Money News Overview Wednesday 10th January 2024: GBP/EUR exchange rate remains above the 200-day moving average

In terms of data, the Eurozone unemployment rate fell to 6.4% in November, well below the 6.5% forecast. However, the release had no effect on the euro. Meanwhile, German industrial production fell 0.7% for November vs. (+0.2% forecast).

There are no significant economic data releases today. Following a 0.3% drop in October, France recorded a 0.5% increase in November industrial production. The overall picture for Eurozone manufacturing activity remains bleak. Instead, the spotlight today will be on central bank speakers as markets refine their forecasts for interest rates in the coming year.

On the currency front, the major pairings remained in tight trading ranges. The dollar edged marginally higher in the limited price activity to notice, supported by a milder tone to risk appetite. In other news, the yen fell overnight on the back of some disappointing earnings reports.

The data calendar is currently somewhat limited. Meanwhile, remarks made by Bank of England Governor Bailey in evidence to the Treasury Select Committee will be watched closely. Speeches by New York Fed President Williams and ECB Board member Schnabel will be of particular interest.

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Money News Overview Tuesday 9th January 2024: All eyes on US inflation reports this week

Markets kick off the day with the UKs British Retail Consortium (BRC) December retail activity report. It has shown in the report that spending has dropped for the festive period likely due to consumer confidence. 

Later today, the EU releases their Unemployment figures where it is expected that the rate of people in the Eurozone who are currently unemployed but seeking work is to remain at 6.5% for the last quarter. 

Looking ahead this week, in the UK there we have the release of the GDP figures whereby markets expect it to show some small growth of 0.2% month on month, alongside this release there will be UK Industrial Production reports in Manufacturing where the growth is expected to come in at 0.3%. 

The key releases this week will be in the US, where they will release their Consumer Price Index figures. Markets currently forecast there to be an increase to 3.2% which is up 0.1% on this time last year. 

Investors will keep a keen eye on the report, with any surprise movement potentially having a heavy impact on the dollar rate. 

As for the dollar, the pound has continued yesterday’s rally rising 50 basis points. As for the pound-euro rate, the pound has continued to hold just above the yearly average. 

Dollar Weakens as Markets Eye ECB Rate Cut Decision
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Money News Overview Friday 5th January 2024: The US labour market report is the focus of attention

The US labour market data for December will be today’s major economic announcement. Payrolls are expected to increase by 170k vs. the previous 199k back in December.

Despite the tight market, pay growth slowed last year, and more indications of this are expected today, with annual growth falling to 3.9% from 4.0% earlier.

Overall, the report is likely to show that interest rates have peaked but will not provide strong evidence for the Federal Reserve to decrease rates sooner.

The December construction PMI survey in the UK is anticipated to show a somewhat slower rate of contraction. According to the consensus forecasts, the headline index will grow from 45.5 to 46.1, remaining below the critical 50 level.

The main currency pairings were trading in very narrow ranges. The dollar was under some marginal downward pressure among the few market movements to note. However, the greenback quickly recovered its losses. Meanwhile, the yen was on the defensive, losing about 1%.

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