Daily Market Report 27/11/2013

GBP 

The pound saw broad support yesterday following ‘balanced’ comments by BoE Governor Mark Carney when questioned by the Treasury Committee. 

Carney told the committee that the UK economy is the strongest major advanced economy in the world but the recovery is still in its early stages and thus the BoE are in no rush to raise interest rates anytime soon. Carney reiterated his recent comments as well, stating that the 7% unemployment rate is a threshold where policy makers will consider hiking up interest rates and thus not a trigger. 

The comments were hardly surprising but the pound was supported ahead of revised third quarter GDP figures released this morning. 

EUR 

The euro strengthened against most of its peers yesterday amid speculation that the ECB won’t look to lower interest rates or roll out quantitative easing any time soon. Recent comments made by a small number of members of the central bank have suggested further easing could occur soon. However it would appear now that the consensus is for the ECB to defer any monetary stimulus for at least another two months. 

USD 

The US dollar declined against most of its peers after consumer confidence figures unexpectedly fell in November, keeping alive the thought that the US quantitative easing programme will continue until March 2014. 

This data offset encouraging data released earlier on in the afternoon that the number of building permits unexpected rose by 6.2% in October. 

AUD

The Australian dollar continued its recent decline as markets have once again become warm to the idea that the RBA may look o lower interest rates further in the first quarter of 2014. Recent comments had been made by members of the RBA that the currency was far too overpriced to help with exports out of the country. 

Today 

As already mentioned above, data from the UK this morning is expected to show that the UK economy expanded at its fastest pace since 2010 in the three months through September to 0.8%. We would expect the pound to gain but given that we are near long term resistance levels against both the euro and the US dollar, the gains could well be limited. 

German consumer confidence is set to have improved very marginally but this should add to the recent support for the euro. 

Data from the US looks set to be fairly mixed with durable goods orders set to have fallen by 1.9% in October and the number of people filing for jobless claims is set to have increased by 7,000. However consumer sentiment figures released from Reuters/Michigan are forecasted to have improved in November. Whilst there is potential for the US dollar to weaken, that weakness could well be limited. 

Key Announcements: 

9.30am – GBP – Gross Domestic Product (Q3): Expected to have improved to 0.8%. 

13.30pm – USD – Durable Goods Orders (Oct): Expected to have fallen by 1.9%. 

13.30pm – USD – Durable Goods Orders ex Transport (Oct): Expected to have improved by 0.5%. 

13.30pm – USD – Initial Jobless Claims (Nov 22): Expected to have increased to 330,000. 

14.45pm – USD – Chicago PMI (Nov): Expected to have dropped to 60. 

14.55pm – USD – Reuters/Michigan Consumer Sentiment Index (Nov): Expected to have increased to 73.5.