Federal Reserve Chair Janet Yellen said the U.S. economy faces no serious short-term obstacles, however she stated that the US must address the important long-term challenges of low productivity and growing inequality. Yellen insisted that improving productivity is “key determinant” of improving living standards over the long term. She also said a greater share of income gains were going to workers with higher education, causing inequality to rise in the U.S.
The US dollar weakened yesterday, hit by disappointment over the lack of detail on economic policy provided in US President-elect Donald Trump’s press conference. It has been hoped that Trump would provide more information on plans for fiscal stimulus and tax reforms.
The number of Americans filing for unemployment benefits rose less than expected in the last week, again indicating a tightening labour market that is starting to encourage faster wage growth.
Other data released yesterday showed import prices posting their largest gain in nearly five years in the last 12 months, suggesting that inflation could soon push higher. Although import prices are being driven by rising oil prices, a stronger dollar could limit some of the impact on inflation going forward.
Prime Minister Theresa May is preparing to deliver a major keynote speech on Brexit early next week. In a long awaited move, Mrs May is expected to provide more detail to the Government’s plan to leave the EU.
Foreign Secretary Boris Johnson and Brexit Secretary David Davis have been involved in drawing up the contents of the speech, which is due to take place ahead of Article 50 being triggered.
It is hoped that this speech will end uncertainty about how the Government will conduct exit negotiations with the European Union.
May’s government is still awaiting a Supreme Court verdict on whether the government is able to start the divorce proceedings without parliament approval. The verdict is expected later this month.
13:30 – USD : Core Retail Sales m/m, expected at 0.5% against a previous 0.2%
13:30 – USD : PPI m/m, expected at 0.1% against a previous 0.4%
13:30 – USD : Retail Sales m/m, expected at 0.5% against a previous 0.1%
15:00 – USD : Prelim UoM Consumer Sentiment, expected at 98.6 against a previous 98.2