Daily Market Report 04/12/2013


Construction figures yesterday showed a big increase from 59 last month to 62.6 this month, the highest in six years amid a revival in the UK housing market. The pound drifted towards a two year high against the US dollar as a result.

The data is once again very positive for the UK, showing that the recovery is gaining momentum and once again inciting speculation that the Bank of England is moving closer to raising interest rates sooner.


The only information out on the Eurozone yesterday was the Producer Price Index which showed a contraction of 0.5%, greater than the previous month’s contraction.

Despite the good news from the UK and bad news from the Eurozone, GBP/EUR did actually drop off slightly, losing around 50 pips.

Data this morning has been positive for the euro with German, Spanish and Eurozone services figures all beating market expectations, causing the euro to have the upper hand in early morning trade.

The euro continues to be supported ahead of tomorrow’s interest rate decision and monetary statement announcement by the ECB, as pressure for the central bank to lower interest rates has subsided given that disinflation fears seem to have eroded.


Overnight we had GDP figures out from Australia which came in worse than expected at 2.3% against expectations of 2.6%. This has seen AUD weaken off significantly overnight, dropping to a fresh 45 month low against the pound.

The data may well spur on the Reserve Bank of Australia to take action to spur on the economy as the mining investment continues to wane.


Today most of the focus is on the Eurozone. Most importantly we have GDP figures. Forecasts are that we will see -0.4% growth which is an improvement on the previous year’s figures of -0.5%.

Retail figures are also out for the Eurozone today which is expected to show an improvement year on year and thus we could well see the euro strengthen further.

For the UK, the big one out today is the Markit Services PMI. The service sector makes up 75% of GDP for the UK so the figures can give us a strong indication of where the economy is heading. The forecast is we could see a slight decline from the previous month.

From the US, the ADP Research Institute is expected to announce 170,000 jobs were added in November, the highest in five months. We could well see the US dollar strengthen off the back of this, as the data will add to speculation that the Federal Reserve may look to taper monetary policy in either December or January.

Key Announcements:

12.15pm – USD – ADP Employment Change (Nov): Expected to show 170,000 jobs were added.

13.30pm – USD – Trade Balance (Oct): The deficit is set to reduce to US$40.00bn.

15.00pm – CAD – BoC Interest Rate Decision and Rate Statement: Expected to remain at 1%.

15.00pm – USD – ISM Non-Manufacturing PMI (Nov): Expected to drop to 55.

15.00pm – USD – New Home Sales (Oct): Expected to improve to 432,000.