06/12/2024
Written by: Ian Morley
Summary:
Yesterday’s trading session experienced further consolidation as markets awaited key economic data releases, including today’s US Producer Price Inflation figures and forthcoming inflation reports from both the UK and the US. With US interest rate markets anticipating a 100 basis points reduction by year-end, contrasted with the UK pricing in a more modest 40 basis points cut, any unexpected data could trigger significant currency fluctuations.
The US Dollar slightly retreated following the release of the latest NY Fed Survey on 3-year inflation expectations, which revealed a sharp 0.6% decrease, bringing the figure down to 2.3%. This marks the lowest level recorded since the survey’s inception in 2013.
Speeches:
Market Insight:
This morning’s UK employment figures revealed a much larger drop in the unemployment rate than anticipated. While markets expected a slight increase from the previous month’s 4.4% to 4.5%, the rate instead fell to 4.2%.
Despite the positive unemployment figures, average earnings growth softened to 4.5%, down from 4.6%. This may provide some reassurance to the more hawkish members of the Bank of England’s Monetary Policy Committee.
Additionally, recent sharp declines in commodity prices suggest a global demand slowdown, with OPEC lowering its oil demand forecasts for both this year and the next. Looking ahead, the Jackson Hole Symposium will begin next week, with the Bank of England’s Governor Andrew Bailey set to speak. This exclusive annual event, hosted by the Federal Reserve Bank of Kansas City, gathers central bankers, economists, US government officials, financial sector participants, and the media.