Daily Forex Fundamental Overview
|Fundamental Analysis
GBP
“Slower economic growth, pressure on employment and a squeeze on spending power, together with affordability constraints, are expected to reduce housing demand during 2017 ”.
-Martin Ellis, Halifax
British house prices climbed for the second consecutive month in December, driven by a shortage of affordable homes. According to the UK's biggest lender, Halifax, the House Price Index grew 1.7% to £222,484 month-over-month in December, surpassing the 0.3% rise forecast, up from November’s upwardly revised gain of 0.6%. This was the fourth straight monthly increase and the largest gain since March 2016.
Meanwhile, in the three month period ended December 2016, house prices advanced 6.5% year-over-year after climbing 6.0% in the three months to November. The house price inflation rate climbed 2.5% and 6.5% quarter-over-quarter and year-over-year in the Q4, respectively. The average house price jumped around £4,000 last month, the fastest increase since the Brexit vote.
Separately, Nationwide reported earlier that capital home prices rose at a slower pace than an average rise in the UK, for the first time in 8 years. However, house prices advanced 4.5% on annual basis, at the same rate as in 2015. Analysts suggest that the UK housing market growth is expected to slow 1-4% during 2017.
CAD
“Firms are much more optimistic about the future. The balance of opinion on future sales improved again, and now exceeds the historic average ”.
-Brian DePratto, TD Bank
Strong US economic growth is likely to boost Canadian business activity in the upcoming months, according to the Bank of Canada’s Business Outlook Survey released on Monday. The indicator of current sales growth remained nearly unchanged, while the indicator of expected sales growth climbed from 13% to 26% in the last quarter, the strongest rate since the end of 2014. In the meantime, companies pointed to a fading pressure of low oil prices and improving export prospects amid an optimistic outlook on the US economy. Currently, Canada sends about three-quarters of its exports to the neighbouring country. Moreover, investment intentions advanced to the highest level in two years, whereas the indicator of employment intentions climbed from 30% to 38% in the preceding survey. The number of employers reporting labour shortages reached the highest level since 2013. However, the figure remained well below its pre-financial crisis levels.
Furthermore, the majority of respondents see the inflation rate would fluctuate between 1% and 3%, below the Bank of Canada’s target of 2%. Some companies suggested that inflation would remain weak aimd low commodity prices and sluggish economic growth.
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