Daily Market Report 11/12/2013


In the UK there were four important sets of data out yesterday. Firstly, there was the RICS house pricing index which improved from 57% in October to 58% in November. 

Secondly, we had trade balance figures. The trade deficit did reduce from -£10.099B to -£9.732B, which was led by an increase in exports. Although this is a positive figure it came in below forecasts -£9.35B.

Thirdly, we had industrial production figures out which came in above forecast at 0.4% growth month on month.

Lastly the NIESR released their quarterly GDP target which showed an improvement from the previous quarter of 0.7% to 0.8%. Interestingly GBP/EUR seemed to drop off quite considerably after the release of these figures indicating the market may have been anticipating stronger growth 

What this did for sterling is we saw it continue its three day gains against the US dollar reaching two year highs in early morning trading. 


Again, data out from the Eurozone yesterday was mixed. Industrial output figures for France came in worse than expected at -0.3% against forecasts of 0.1%, whereas in Italy industrial output grew by 0.5% against forecasts of 0.2%. 

GDP figures also came in better than expected for Italy, although still not very good. Quarter on quarter there was no growth against an expected contraction of 0.1% 

Mario Draghi’s speech yesterday appeared to be a non-event with Draghi criticising Mark Carney’s plans to tackle asset bubbles, stating that he prefers strict monetary policy. 


Overnight we had news that the Republicans and Democrats in the US have reached a deal on the US budget, which could avert a repeat of the government shutdown that occurred in October. 

The deal would see US$63bn worth of spending cuts over two years and around US$22bn in deficit reduction. The deal, should it be finalised this week, will boost prospects for the Federal Reserve to taper their quantitative easing program, potentially as early as next week (December 18th). Tapering of quantitative easing should strengthen the US dollar. 


Already this morning we have had inflation figures out for from Germany, which came in as expected rising to 0.2%. This should add to the argument that the ECB may not need to introduce any further monetary stimulus to combat falling inflation. 

Other than that there is not too much information out today. The Reserve Bank of New Zealand interest rate decision is out tonight.

Key Announcements: 

12.00pm – USD – MBA Mortgage Applications (Dec 6): Previously fell by 12.8%. 

20.00pm – NZD – RBNZ Interest Rate Decision and Press Conference: Expected to remain at 2.5%.