Daily Market Report - 15/10/2015

GBP
Britain's jobless rate has fallen to its lowest level in more than seven years but pay growth was a bit slower than expected, suggesting the labour market is not strong enough to speed up a Bank of England interest rate hike.

Britain's unemployment rate fell to 5.4 percent in the three months to August, down from 5.5 percent in the three months to July. It was the lowest jobless rate since the second quarter of 2008, before the worst of the financial crisis, and came in below the forecast rate of 5.5%.

Average earnings figures largely disappointed (important as it means we have more money to spend, especially with inflation so low). Excluding bonuses, average weekly earnings growth slowed slightly to 2.8 percent in the three months to August, down from 2.9 percent in the three months to July which was the strongest growth rate in over six years.

The new Bank of England policymaker Gertjan Vlieghe established himself as one of the rate-setters least likely to vote for a interest rate hike soon, urging the bank to wait and see and warning of risks from a global economic slowdown. In his first speech since joining the bank he said there was a greater chance that inflation in Britain would come in below target rather than above it.

USD
U.S. retail sales barely rose in September and producer prices recorded their biggest decline in eight years, raising further doubts about whether the Federal Reserve will raise interest rates this year. Retail sales edged up 0.1 percent last month, with was below a forecasted rise of 0.2%

The weak reports on Wednesday were the latest suggestion that the economy was losing momentum in the face of slowing global growth, a strong dollar and lower oil prices that are hampering capital spending in the energy sector. Further increasing the likelihood of a rate rise next year.

In a separate report, the Labor Department said on Wednesday its producer price index fell 0.5 percent in September, the largest drop since January, after being unchanged in August.. 

Key Announcements
13:30 – USD – Consumer Price Index (YoY) expected to fall from 0.2% to -0.1%
13:30 – USD – Contiuning Jobless Claims expected to fall from 2.204M to 2.195M
13:30 – USD – Initial Jobless Claims expected to rise from 263k to 270k