Author Archives: Ricky Kielkowski

Global markets are off to a cautious start today as there is no economic data being released this morning, therefore focus will shift to policymaker’s speeches.

The European Central Bank, Bank of England and US Federal reserve all have members speaking today. Investors will keep a close eye on the comments of the central bank speakers to understand their stances on interest rate cuts.

Inflation is descending throughout the world; however central banks need to remain firm on their outlook for future rate cuts to guarantee inflation reaches its target level of 2 percent.

This afternoon in the US, the number of people who have filed for unemployment benefits is forecasted to come in at 220k.

 UK business confidence achieved a 2-year high this month. Furthermore, the UK PMI release earlier this week, showed that the services sector expanded at the fastest rate in 8 months. These are all signs of a positive UK economy, and they have supported the Pound against the Euro this week.

Given a quiet data calendar yesterday, there wasn’t much for markets to digest or take direction from. Both sides of the Atlantic had a relatively sparse diary.

The most notable release was Eurozone retail sales data for December. The headline number declined by 1.1% in the month, compared to forecasts of a 1.0% decline. The data, however, had no apparent impact on the markets.

The main currencies were trading in tight ranges yesterday. This pattern continued in overnight trading. In the slight action that has occurred over the last 24 hours, the pound has regained some ground against the dollar and is also higher against the euro.

Today’s macro data diary is once again weak in high-impact releases. As a result, the majors may trade in rather narrow ranges within and around their current levels.

Yesterday, the Bank of England left monetary policy steady, as expected by the market. The British Pound was volatile following the decision to keep interest rates at their current levels, signalling cautiously that the next move would be a rate drop.

Data-wise, Eurozone flash HICP inflation fell to 2.8% in January, matching expectations. Core inflation was recorded at 3.3%, slightly higher than the 3.2% expectation.

In other news, the most recent weekly initial unemployment claims statistic in the United States increased to 224k (up from 214k expected). Meanwhile, the manufacturing ISM increased to 49.1 (against the 47.0 forecast). However, the data had little impact on market mood.

Currency-wise, the dollar gave back some of its gains from the day before. Overall, the dollar fell almost 0.7% against the euro and sterling.

Today’s main release will be the January US labour market data. Payrolls are expected to increase by 180k this month (up from 216k the prior month). The unemployment rate is anticipated to climb slightly, to 3.8% from 3.7%, but average wage growth is expected to remain steady.

The main economic data release today is the Bank of England policy announcement. The Bank of England are anticipated to hold interest rates at 5.25 percent despite inflation dropping.

Purchasing Managers Index figures in the manufacturing sector are set to increase from their previous releases in the European Union and United Kingdom, showing consumer spending is beginning to increase as inflation drops around the world. 

Elsewhere this morning, we have the European Union inflation report and unemployment figures.

Monetary policy decisions have been this week’s key focus for investors. Yesterday evening the US Federal Reserve kept interest rates unchanged between the region of 5.25 percent – 5.50 percent.

Fed Chairman ‘Jerome Powell’ comments followed after; he stated that there is unlikely to be further rate hikes and that the first interest rate cut is expected to be in March. 

 The Pound has been trading in a tight range against the Euro this week, as markets await the European Union inflation report and the Bank of England policy announcement today.