Daily Market Report - 14/01/2015

GBP
UK inflation halved in December to the lowest level on record as the sharp drop in global oil prices fed through to petrol pumps and the supermarket price war cut consumers shopping bills. Inflation fell to 0.5% in December from 1% in November taking consumer prices index (CPI) to the joint lowest level since equivalent records began in 1989.

Governor Carney said inflation could slow further in the coming months, backing his argument to keep interest rates at a record low. Plunging oil costs and supermarket price wars have eaten into inflation, and the outturn represents “good news” for British consumers, Carney said. The outlook for inflation in the U.K. remains weak. Oil slipped below $45 a barrel yesterday and a global supply glut has pushed prices down to the lowest in more than 5 1/2 years. Separate data showed factory-gate prices, a leading indicator of inflation, fell the most since 2009. Carney said inflation may continue to drift down in the coming months.

EUR
The euro fell after ECB Governing Council member Ewald Nowotny said during a panel discussion in Vienna that policy makers must treat the threat of deflation seriously and shouldn’t delay a response. Executive Board member Benoit Coeure was quoted in an interview saying the ECB is “in a position to take a decision on Jan. 22.”

Also Greek Finance Minister Gikas Hardouvelis said the nation could exit the euro zone by accident if a new government fails to reach an agreement with international creditors soon after this month’s election.

USD
Job openings climbed in November to the highest level in almost 14 years as the strengthening U.S. economy fuelled demand for labour. The number of positions waiting to be filled rose by 142,000 to 4.97 million in November, the most since January 2001, a report from the Labour Department showed today. The pace of hiring cooled and fewer Americans quit their jobs.

Gains in hiring, waning dismissals and rising confidence underscore a vibrant labour market that in 2014 marked its strongest performance since 1999. Tuesday’s data will help policy makers assess the progress on employment and growth as they consider when to begin raising interest rates. The median forecast projected 4.85 million openings in November. The October reading was 4.83 million.

Key Announcements
13:30 USD – US Retail sales figures (Dec) expected to fall to -0.1% from 0.7%
14:15 GBP – BOE’s Governor Carney speech

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