North Korea fired another missile over Japan into the Pacific Ocean on Friday. The regimes defiance towards recent UN sanctions has had a mooted effect on the markets as many are growing accustomed to Pyongyang’s actions.
In an unsurprising move on Thursday, the Bank of England’s Monetary Policy Committee voted 7-2 to keep UK interest rates at 0.25%. The minutes of the meeting commented that there is a “slightly stronger picture” for the UK Economy with a strong labour market, continued housing demand and the recent improvement in retail sales. Such rhetoric has many believing that, if wage growth continues to rise, the possibility of a rate hike may occur earlier than expected. Following the meeting, GBPUSD rose over 1.4% to reach 1.34038 – a level last seen 12 months ago.
On Thursday, data from the US Labour Department revealed a rise to 0.4% in August in the Consumer Price Index – bettering July’s insipid 0.1% increase. Core CPI is running at 1.7%, which is likely to provide some much-needed assistance to the Fed and its 2% inflation target. Following the data release, the likelihood of a US rate hike in December increased to 50.9% from 41.3%, per CME#’s FedWatch Tool. More data showed the US Labour market staying strong, as initial claims for unemployment benefits declined 14K. The seasonally adjusted rate of 284K (week ending September 9th) is below the 300K threshold for 132 weeks – the longest such run since 1970. The strong labour market appears to be helping, finally, push inflation higher. Market focus will now center around next week’s FOMC meeting for more clues on US economic policy and the timing of tightening in the months ahead.
EURUSD climbed, after hitting a 2-week low on Thursday, to currently trade around 1.1920.
USDJPY is little changed and currently trades around 110.40.
GBPUSD hit a 1-year high on Thursday and has maintained upwards momentum overnight to currently trade around 1.3410.
Gold was relatively flat and currently trades around $1,330.
WTI slipped overnight, after gaining over 1% on Thursday. Currently, WTI is trading around $50.20.
Major economic data releases for today:
At 11:00, Eurostat will release Eurozone Trade Balance for July. Consensus is suggesting €21.4B from the previous release of €26.6B. With relatively good economic growth in the Eurozone the markets will likely only react if the data is significantly different than expected.
At 13:30, the US Census Bureau will release the “much anticipated” Retails Sales (MoM) report for August. The previous strong reading of 0.6% is not expected to be beaten with the release today – consensus is suggesting a figure of 0.1%. As a good indicator of consumer spending, the markets will be hoping that the release stays in positive territory. A negative release will cause a weakening in USD and add volatility into the markets.
FxPro UK Limited is authorised and regulated by the Financial Services Authority, registration number 509956. CFDs are leveraged products that incur a high level of risk and it is possible to lose all your capital invested. Please ensure that you understand the risks involved and seek independent advice if necessary.
Disclaimer: This material is considered a marketing communication and does not contain, and should not be construed as containing, investment advice or an investment recommendation or, an offer of or solicitation for any transactions in financial instruments. Past performance is not a guarantee of or prediction of future performance. FxPro does not take into account your personal investment objectives or financial situation. FxPro makes no representation and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied by any employee of FxPro, a third party or otherwise. This material has not been prepared in accordance with legal requirements promoting the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. All expressions of opinion are subject to change without notice. Any opinions made may be personal to the author and may not reflect the opinions of FxPro. This communication must not be reproduced or further distributed without the prior permission of FxPro. Risk Warning: CFDs, which are leveraged products, incur a high level of risk and can result in the loss of all your invested capital. Therefore, CFDs may not be suitable for all investors. You should not risk more than you are prepared to lose. Before deciding to trade, please ensure you understand the risks involved and take into account your level of experience. Seek independent advice if necessary. FxPro Financial Services Ltd is authorised and regulated by the CySEC (licence no. 078/07) and FxPro UK Limited is authorised and regulated by the Financial Services Authority, Number 509956.