- German CPI (Final) y/y inline with 0.8% forecast, previous
- U.K. ILO Unemployment Rate better-than-expected: 6.0% vs. 6.1% forecast, 6.2% previous
- U.K. Claimant Count Change weakens: -18.6K vs. -35K forecast, -33.2K previous
- Swiss Credit Suisse ZEW Survey weaker: -30.7 vs. -7.7 previous
The big data point of the morning was the unemployment data from the U.K., showing an improvement in the unemployment rate, but less of a decline in new jobless claims. With mixed data usually comes a mixed reaction in the currency markets and that’s what we got in Sterling as the pair initially dropped ahead of and into the news, but quickly saw buyers hopping back in within the hour. After all of the choppiness, Sterling is back to breakeven on the session with GBP/USD trading around 1.5916 and GBP/JPY trading around 170.24 (falling after hitting 171.00 during the Asia session).
The only real currency move of note during the morning London session was the move in the Loonie, on what looks to be a strong downtrend since the Tuesday U.S. session (USD/CAD is up 170 pips (+1.15%) since hitting 1.1210 yesterday). There doesn’t seem to be a direct catalyst that I can see, but the insane drop in oil assets recently (NYMEX crude -23% since June) may finally be catching up Canada’s strong oil industry. This move is definitely one to watch, especially given the relative strength the Loonie has shown relative to the other comdolls.
We finally get to see a pick up in activity on the forex calendar for the Wednesday afternoon London/morning U.S. session thanks to a hefty mix of U.S. economic data.
At 1:30 pm GMT, we’ll get the Empire State survey, retail sales, and producer price index, with the latter two being the potential market movers. Retail sales is forecasted to come in below previous reads on both the headline and core, and the producer price index is expected to come in at 0.1% on both the headline and core. With two important data points coming out at the same time price action can get pretty choppy, so watch those Greenback orders and positions closely at this time.
At 3:00 pm GMT, we’ll get the U.S. business inventories data for a fresh read on business conditions from the retailers, manufacturers, and wholesalers perspective. The forecast is to come inline with the previous read of 0.4%. This is a mid-tier event, so it’s not likely to cause a big spike in volatility.
The same goes for the release of the Fed’s Beige Book report at 7:00 pm GMT. This mid-tier data point is a report by the Fed using anecdotal analysis of the economy by the twelve Federal Reserve banks. It’s rare that it moves the markets, but it’s something to be aware of.
Finally, ECB President Mario Draghi will be giving a speech today at the European Cultural Day event, also at 7:00 pm GMT. While no new insights to European monetary policy is expected, whenever Draghi speaks, we should always be aware and ready to act. Stay frosty!
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