Daily Market Report - 28/01/2016

GBP

The Nationwide HPI (House Price Index) showed that house prices in the UK rose 0.3% this month compared with 0.8% the month before. Nationwide’s Chief Economist commented that; ‘As we look ahead, the risks are skewed towards a modest acceleration in house price growth, at least at the national level and that the labour market appears to have significant forward momentum.

Employment has continued to rise at a robust rate in recent months and, while the pace of earnings growth has slowed somewhat, in inflation-adjusted terms regular wages continue to rise at a healthy pace. With this trend expected to continue and with interest rates also likely to stay on hold for longer than previously anticipated, the demand for homes is likely to strengthen in the months ahead.
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USD

Thursday saw the first FOMC statement since their first rate hike last month for almost a decade. Federal reserve officials left interest rates unchanged at 0.25% and said they are still expect borrowing costs to rise this year, at a ‘gradual’ pace, and are going to monitor global economic and financial developments in the coming months. 
 
The average projection of policy makers’ forecasts in December called for four quarter-point rate increases in 2016; however, fed fund futures markets indicated ahead of the FOMC statement that traders see just one or two hikes coming in 2016.  The announcement had a direct effect on the S&P500 as it dropped 1.3% straight after the statement, as traders expressed disappointment that the Feb appeared less dovish than the market had hoped.
 
The dollar initially strengthened, but quickly lost its gains and returned to around where it was trading previously during the day.  Both Brent and WTI oil prices held above $30 a barrel. 
 
US also released the MoM New Home Sales Change, which is the number of new homes sold the previous month.  There were 544,000 homes sold up from 491,000 the month before, further proving the health of the US economy in recent months.  
 

Key Announcements

GBP: 09:30 Gross Domestic product (QoQ) (Q4) Expected to rise to 0.5% from 0.4%

GBP: 09:30 Gross Domestic product (YoY) (Q4) Expected to fall from 2.1% to 1.9%

USD: 13.30 Initial Jobless Claims expected to fall from 293,000 to 282,000

USD: 13.30 Durable Goods Orders (Dec) expected to fall to -0.6% from 0%