Daily Market Report 29/10/2013

Despite data showing on Friday that the UK grew by 0.8% in the third quarter, the pounds performance continued to be lacklustre yesterday following comments made by Bank of England economist David Miles. 

Miles seemed to give out a warning to those anticipating an interest rate rise before the recent projections by the BoE. Miles stated that it would be “pretty catastrophic” to raise interest rates based on the good news about the economy over the last six months and before we see a meaningful in unemployment. He did however comment that the impact of the recent storms in the south east of England would only cause a ‘blip’ in fourth quarter GDP. 

Retail figures from the Confederation of British Industry showed that only 2% of retailers reported an increase in sales in October, a sharp drop from the 34% that we saw in September. 

The US dollar drew some support yesterday after data revealed that US industrial production rose by a 0.6% last month, above expectations for a 0.4% rise and the fastest increase in seven months.

However gains for the US dollar were limited as US pending home sales fell 5.6% last month, down for the fourth consecutive month and well below market calls for a gain of 0.1%. 

Overnight Japan saw some encouraging data as the unemployment rate remained at 4% and retail sales increased to 0.7% in September after a fall of 0.1% in August. The data should alleviate any immediate concern that the Bank of Japan may look to increase stimulus when the central bank meet later this week.

The Australian dollar came under pressure again following comments made by Reserve Bank of Australia Glenn Stevens that the currency’s present levels aren’t supported by costs and productivity in the economy. He is of the opinion that the currency will be ‘materially lower’ than currently. 

Data released this morning showed that consumer confidence in France remained at 85 just missing an expected rise to 86. Mortgage approvals increased in September to 66,735 from 63,396 in August giving the pound a boost in early trade

Key Announcements:

12.30pm – USD – Producer Price Index (Sep): Expected to have risen by 0.6%.

12.30pm – USD – Retail Sales (Sep): Expected to have only by 0.1%.

14.00pm – USD – Consumer Confidence (Oct): Expected to fall to 75.3