Daily Market Report 10/12/2013

EUR

The euro experienced mixed data yesterday and as a result demand for the currency wasn’t as high as we saw last week.

Data from Germany revealed that imports rose by 2.9% in October, while exports increased by just 0.2%. That left Germany with a trade surplus of €16.8bn for the month, less than the €18.0bn economists had expected.

Industrial Production in Germany fell by 1.2% in October and the Sentix Investor Confidence dropped from 9.3 to 8 for December.

USD

The US dollar continued its broad weakness overnight despite comments made by James Bullard of the Federal Reserve. Bullard commented that given the current data and improving job market in the US, tapering of the Fed’s monthly bond buying programme is looking odds on. Any cut however could well be modest due to low inflation.

One of the criteria laid out by the Fed was for inflation to be just below 2%, currently the rate of inflation stands at 1%.

GBP

In speech made by Mark Carney yesterday evening, the Bank of England Governor reiterated his previous stance that a hike in interest rates would only be an option once the UK economy shows a sustained recovery.

Data from the UK this morning showed that industrial production exceeded expectations in October rising by 0.4% whilst manufacturing production fell in line with expectations rising by 0.4% also. The pound continued to be relatively supported despite the mixed data and the comments by Carney.

Today

ECB President Mario Draghi is set to make a speech today in Rome, where expectations are for him to downplay the possibility of any further monetary easing by the Central Bank.

Also the National Institute of Economics and Social Research will also be releasing their UK economic growth estimate for the three months leading up to November. Given recent data, we could well see the estimate revised higher from 0.7% to 0.9%.

Key Announcements:

12.00pm – EUR – ECB President Draghi’s Speech.

15.00pm – GBP – NIESR GDP Estimate: Previously at 0.7%