Daily Market Report - 21/01/2016

GBP

Wage growth in Britain slowed in the three months to November even though unemployment fell to its lowest since early 2006, underlining why the Bank of England is saying it will take its time before raising interest rates.

Pay rises were the weakest since the three months to February, official data showed on Wednesday. Sterling edged up as investors focused on strong job creation that took the unemployment rate to 5.1 percent.
The rapid fall in joblessness since 2013 has wrong footed the British central bank, which had expected wage growth to pick up more quickly than it has.
 
BoE Governor Mark Carney said on Tuesday that the Bank had no timetable for raising interest rates and that the level of unemployment at which wages become inflationary could be lower than previously thought. The weak performance in pay has been linked to factors such as the strong flow of migrant workers coming to Britain and employees choosing to work fewer hours.

USD

In the US, the consumer price index fell 0.1% month on month in December after being unchanged the previous month. Analysts had been expected the index to also remain flat in December, but the falling oil price helped push it lower. However the year on year figure rose 0.7%, following a 0.5% gain in November. The core CPI, which strips out energy and food costs, rose 0.1% month on month after rising 0.2% for the previous three months, and 2.1% year on year.

OIL

US oil prices fell below $27 for the first time since 2003 after the International Energy Agency warned on Tuesday that the oil market could drown in oversupply.

Key Announcements

13:30 – EUR – ECB Monetary Policy Statement and Press Conference
13:30 – USD – Initial Jobless Claims expected to fall to 278k
13:30 – USD – Continuing Jobless Claims expected to fall to 2.248M from 2.263M