Daily Forex Fundamental Overview

Fundamental Analysis

GBP

"The UK manufacturing data came much weaker than expectations and this presents a major threat for the economy".

- Naeem Aslam, Think Markets

British industrial production posted the biggest monthly fall in more than four years in October after the temporary shutdown of the UK's largest oilfield. According to the Office for National Statistics, industrial output declined 1.3% in the reported month, following September's drop of 0.4% and falling behind the 0.2% rise market forecast. That was the largest decline since September 2012, when the Buzzard oilfield, the biggest in the UK North Sea, was also closed for lengthy maintenance. On a yearly basis, industrial production decreased 1.1% in October, the largest contraction since August 2013. In the meantime, the country's manufacturing output declined 0.9% on a monthly basis over the period after rising 0.6% in September, while markets anticipated a slight decrease to 0.2%. Nevertheless, the UK economy has so far performed better than expected since the Brexit vote. According to the Bank of England's latest forecasts, the economy is set to expand 1.4% in 2017, compared to a 2.2% growth registered in 2016. Moreover, the Central bank forecasts a threefold increase in inflation next year. Currently, the UK inflation rate is 0.9%. After the release, the GBP/USD pair was seen trading below $1.2600, while the EUR/GBP pair rose above 0.8500.

USD

"(Crude inventories saw a) solid drop, despite a rebound in imports, as refining activity increased".

- Matt Smith, Clipper Data

The number of job openings was little changed in October, official figures revealed on Wednesday. According to the Bureau of Labor Statistics' JOLTS survey, employers advertised 5.53 million openings, a rate of 3.7%, in the reported month, in line with analysts' expectations. Meanwhile, the September figure was revised up to 5.63 million from the originally reported 5.49 million openings. Hiring dropped to 5.1 million, whereas the number of separations decreased to 3 million. However, the data suggest that hiring is unlikely to rise in the upcoming months. The biggest declined in job openings occurred in professional and business services, which includes accountants and engineers as well as temp workers. The number of job vacancies advanced 2% over the past year, while hiring decreased 2.2%, suggesting that employers face difficulties in finding skilled workers. The following gap and low unemployment rate may force businesses to raise pay to attract workers. Other data released on the same day by the EIA showed crude oil inventories fell 2.4 million barrels in the week ending December 2, whereas analysts expected a fall of 1.4 million barrels, following the preceding week's declined of 0.9 million. After the release, WTI futures fell 1.4% to $50.20, while Brent crude declined 1% to $53.38.

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