Daily Market Report – 13/06/2014

Governor Mark Carney stated last night that the first rate rise could happen sooner than markets currently expect. As a result the pound jumped up significantly against all of its major trading partners.

He also said the UK economy is currently unbalanced internally and externally.Internally, there is wasteful spare capacity concentrated in the labour market. The Monetary Policy Committee (MPC) currently estimates this gap to be around 1-1.5% of GDP, though we caution against false precision as there are wide confidence bands around this central view.

But Carney says he wants to be clear that that Bank's Monetary Policy Committee has "no pre-set course" as It all depends on the economic data. Mark Carney also touched on the UK housing market and the risks posed by the recent sharp increase in prices.

US retail sales rose by just 0.3% in May, just half as much as expected. But April's initial reading of 0.1% has been revised up to a healthier-looking 0.5%. Also the number of Americans filing new claims for jobless benefit rose a little last week, to 317,000 from 313,000 the previous week.

This helped to give the dollar some support in the afternoon trading session.

Key Announcements:
10:00 - EUR -  Eurozone Employment change Q1 - Expected to stay the same at 0.1% 
10:00 - EUR - April Eurozone Trade balance - Expected to rise  to 15.9B from 15.2B Surplus
13:30 - USD -  May Producer Price Index - Expected to come in higher at 2.4% from 2.1%

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