Daily Market Report 18/11/2013


The pound received a further boost on Friday following comments made by Bank of England policymaker Martin Weale that current inflation expectations may mean that the BoE may have to raise interest rates sooner as well as saying he wouldn’t be surprised if the economy grows faster than analyst estimates.


Data on Friday reconfirmed that Eurozone annual inflation has fallen to 0.7% in October down from 1.1% in September. The data was hardly surprising and there was limited impact on the currency itself, with moves against the euro dictated more so by its counter currency.


The US dollar weakened after the Fed’s empire manufacturing index falling to -2.21 from 1.52 in October. Industrial production also fell unexpectedly to -0.1% in October from 0.7% in September. Both sets of data are not encouraging as it looks like the effects of the fiscal debate and government shutdown have not disappeared yet.


The only notable data today is due from the US department of treasury, with net long term TIC (Treasury International Capital) flows set to have increased to US$21.3bn. The TIC flows is seen as a government resource for offsetting the current trade deficit.

Eurozone trade surplus is set to have increased further to €12.5bn, which should support the euro. In fact data for the rest of the week suggests that the euro may well strengthen this week. German and Eurozone manufacturing and services sectors are all set to have expanded further and Germany’s GDP figure set to have increased further.

Key Announcements:

9.00am – EUR – Current Account (Sep): Expected to have increased to €18.3bn.

10.00am – EUR – Trade Balance (Sep): Expected to have increased to €12.5bn.

14.00pm – USD – Net Long Term TIC Flows (Sep): Expected to have increased to US$21.3bn.

15.00pm – USD – NAHB Housing Market Index (Nov): Expected to have increased to 56.