UK unemployment and wages growth data today

Today's Highlights

Rouble at record low

UK inflation at 12 year low

UK unemployment and wages growth data today

US Federal Reserve will be closely watched

FX Market Overview

A father whose children managed to survive the massacre in Peshawar because they were offsite playing cricket, summed the whole grotesque situation up when he said, "I just want to ask the Taliban where in the Quran it says you can slaughter children." There can be no justification for the cowardly wholesale murder and maiming of children whose only crime was that they were attending a school attached to an army barracks. Some 250 families are grieving and/or dealing with injured children and all are almost certainly traumatised. Is that supposed to enlist support for the murderers' cause?

In the financial markets, the destruction of the Russian Rouble was the main talking point. The Russian currency started plummeting when the central bank raised the base rate to 17% and news reporters started talking about how bad the recession was going to get rather than about whether a recession was inevitable. That seems to be a given. The Rouble dived from 58 against the US Dollar to nearly 80 in a very short space of time. Some of the Russian media is blaming speculators for the decline. That obviously holds some weight but there is no doubt the slump in oil prices to a 5 year low and sanctions driven by the Crimean annexation have created a perfect storm for speculators to capitalise on.

The other big news was a sharp drop in UK inflation. A drop in fuel costs was at the heart of a slump to a 12 year low of 1.0% on the CPI measure. That'll prompt a letter from the BOE Governor to the Chancellor explaining why inflation is 1% below the bank's 2.0% central target. Sterling slipped a little on the news but this had been expected by the markets and the BOE. This morning's wage price inflation and unemployment numbers are likely to lift the Pound again. If wages are running ahead of inflation, which they very likely are, the BOE has one of its criteria met before they will consider interest rate hikes. However, that is still unlikely before mid-2015 at the earliest. We will also get the minutes from the last Bank of England meeting this morning but I doubt there is any shift in the 7-2 voting pattern.

This morning also brings the Eurozone inflation data which is forecast to be in line with the 0.3% provisional estimate. That is unlikely to move the euro but Greek Presidential voting will be closely watched for any sign that Greece is edging towards a General election.

The afternoon is all about US inflation and the interest rate decision from the US Federal Reserve. No change is expected in the Fed's base rate but the press conference at 7.30pm UK time will be interesting as traders try to determine if there is any change of policy due in 2015.

And Father Michele Madonna was so fed up with people using their mobile phones in church that he installed a jamming device to stop all communication with everyone other than you-know-who. That might be a brilliant stroke of genius but local businesses in Naples are complaining because it has also stopped their point of sale card payment machines from communicating with the service providers. This may well be a very important time of year for the church but business is business Father.