In Germany the ZEW index that measures investors’ confidence, decreased slightly and now stands at 61.7, from 62.0 in December. This figure was also positive for the entire Eurozone coming in at 73.3 for January higher than December’s figure of 68.3. This helped to provide some support for the euro early Tuesday morning.
IMF chief economist Olivier Blanchard has reported that The UK recovery appears to be sustainable. Blanchard said the IMF had raised its UK growth forecast to 2.4% for this year, from a previous forecast of 1.9%. The upgrade is the biggest for a G7 country.
This saw the pound continue to strengthen as stronger growth will lead to reduced unemployment and increase the likelihood of interest rates being raised in the UK
He also stated that global growth would pick up to 3.7% in 2014 from 3% last year but warned that there were still plenty of risks for the global recovery.
The Confederation of British Industry said its index of industrial order expectations fell to -2 points this month from 12 in December, and below expectations of a reading of 10. However, the CBI said the volume of total orders for the next three months rose to 22 from 14, the highest level since April 2012. New orders in the three months to January saw their strongest growth in nearly three years.
The Australian dollar had a welcome boost early this morning with the final inflation figure for 2013 coming in above expectations at 2.6% for the year. This figure will dampen expectations of an interest rate rise given the reserve bank has an inflation target band of between 2% to 4%. Reserve Bank Governor Glen Stevens has hinted at lowering interest rate if required to stimulate the slowing Australian economy.
We have a big day for the pound today after a quiet start to the week. We have the minutes from BOE interest rate decision where they may discuss their outlook for forward guidance. Also at the same time the minutes are released we have the November unemployment rate set to fall to 7.3%.
At midday we have Mortgage applications in the US for the 17th of Jan as well as latest interest rate decision in Canada.
9.30am – GBP – Bank of England Minutes.
9.30am – GBP – Claimant Count Change (Dec): Expected to worsen slightly to -35,000.
9.30am – GBP – Unemployment Rate (Dec): Expected to fall to 7.3%.
12.00pm – USD – Mortgage Applications: Previously at 11.9%.
15.00pm – CAD – Bank of Canada Interest Rate Decision.