Day of days as US finally raises its interest rate

Data out from the UK yesterday included comprehensive unemployment data, amongst which was news of a drop to 5.2% in unemployment levels, the lowest number we’ve seen since the start of 2006. The flipside of this was a drop in wages to just 2% which is 0.5% less than last year. Following news that the Fed increased the US interest rate, pressure will now be on Mark Carney of the BoE to do the same – for the time being, though, things are likely to stay “low for long”.

Data from the UK today includes retail sales numbers for last month.

There wasn’t too much action from the euro yesterday as the markets awaited news of what was due to transpire in the States. We saw CPI data out (both monthly and yearly) – while this exceeded expectations, there wasn’t much impact on euro strength. There was PMI data also out for Germany, France and the whole Eurozone which yielded mixed results.

There won’t be much data of interest from Europe today. The Fed’s decision last night and market events elsewhere will likely have more influence on EUR than domestic events.

To the US where months of build came to fruition last night as we saw an interest rate hike for the States by 0.25%. This is the first time in 7 years that the US has increased rates over 0%. This will be followed by a cautious approach by Janet Yellen and the Fed, but there is now a strong likelihood that the rate will be raise further by 1.5% by the end of next year. Overall, the tone coming from Janet Yellen was very upbeat, irrespective of the impact of low oil prices and a strong USD on current inflation levels. It now all begs the question, when will the UK follow suit, and how will the rate rise affect markets around the world.