Daily Market Report - 10/10/2014

The US Dollar strengthened during Thursdays session after data revealed the number of Americans filing applications for unemployment benefits unexpectedly fell last week. This pushed the average over the past month to the lowest level in eight years and signalling that employers are hanging on to workers as the economy improves.

Firings are hovering around the lowest in almost a decade as employers retained their workforce to meet rising demand. This excellent jobs figure is continuing the positive trend from the first nine months of the year.  It also lays the ground for stronger gains in hiring and wages that will give the world’s largest economy a boost even as global growth is expected to cool.

The U.S. economy is predicted to grow 2.2 percent this year, compared with a 1.7 percent projection in July,the International Monetary Fund said this week. Federal Reserve policy makers are watching for evidence the labour market has been restored to full health before raising interest rates, which have been held near zero since December 2008. Most Fed policy makers indicate they expect an initial rate rise next year.

The euro declined against the dollar as European Central Bank President Mario Draghi said the central bank must lift inflation from an “excessively low” level.  Stating that “We are accountable to the European people for delivering price stability, which today means lifting inflation from its excessively low level,” Draghi told Group of 20 finance ministers and central bankers gathered in Washington. “And we will do exactly that.” Quite how Draghi intends to achieve increased inflation figures is currently unknown, but economic stimulus is being muted as a possible option. 

European Central Bank president has stopped short of large-scale sovereign-bond purchases as efforts to mollify Germany’s political elite do little to silence criticism of his ever-more expansionary measures. Support for anti-euro groups such as Alternative for Germany has risen and the ECB’s latest plan to buy assets sparked an outcry within all major parties. 

Key Announcements:
9:30 BST  GBP: UK Trade Balance  expected to improve to  -9.6B from -10.2B

Our dealers are available via e-mail (dealers@rationalfx.com) or by phone (020 7220 8181).