Daily Market Report 28/11/2013

GBP

UK third quarter GDP came in as expected at 0.8% quarter-on-quarter; with the year-on-year figure unchanged, at 1.5% .Economic growth broadened a little in the third quarter as companies increased investment – but growth was still driven by consumer spending largely off the back off cheap credit.

A breakdown of the figures shows household spending was up 0.8% quarter-on-quarter while industrial output rose 0.6% on the quarter. Initially the market’s reaction was fairly muted and the pound fell slightly. There was then an uncharacteristic delayed response that saw GBPUSD surge to the highest level since Jan 2013. The market then pulled back around 3pm off its highs to close 0.5% higher at the end of the UK trading day after positive US data.

USD

We saw mixed data in the afternoon from the US. Durable goods orders fell 2.0% month-on-month in October - this was worse than the expected 1.9% contraction. Firms may have held back on placing orders for expensive equipment while they waited to see if the US would default on its debt obligations. 

The good data came in from the job market as the number of new claims for jobless benefits made last week fell to 316,000 down from 326,000 in the previous seven days. The four-week average of new claims also improved, suggesting the job market has picked up pace. 

The Chicago purchasing manager’s index for November came in higher than expectations at 63 above the 60 level expected. Michigan consumer confidence sentiment for November also came in higher at 75.1 above consensus and last month’s data. 

Today

With the Thanksgiving holiday there is no US data due out today.

We could see some movement in the euro with the German unemployment rate to come in at 6.9% and Eurozone consumer confidence data being released in the morning. In the afternoon Germany is also releasing its inflation data – this is expected to come in slightly higher at 1.3% compared with 1.2% last month.

From the UK, the Bank of England’s financial policy committee will release its latest assessment of the UK economy and Mark Carney will be holding a press conference. Investors will be looking for any hawkish comments from the Governor to continue to drive the pound higher.

Key Announcements:

10.00am – EUR – Consumer Confidence (Nov): Expected to worsen to -15.4.

10.00am – EUR – Economic Sentiment Indicator (Nov): Expected to improve marginally to 98.

10.00am – EUR – Services Sentiment (Nov): Expected to improve to -3.5.

10.30am – GBP – Financial Stability Report.

13.00pm – EUR – German Consumer Price Index (Nov): Expected to rise to 1.3%.