Daily Market Report 15/09/16 - Unemployment Steady, Sterling Awaits Super Thursday

GBP

The UK Labour market showed buoyancy following the Brexit vote in June, unemployment rate being printed the same as previous at 4.9%. The number of people in work rose by 174,000 as per ONS statistics. Nevertheless, wage growth slowed which signals potential tough times ahead with the real effect of a Brexit vote yet to be fully nominalised in economic data following the decision. Total earnings including bonuses however increased by an annual 2.3% in three months to July, slowing from 2.5% in Q2.
 
Market participants keep a firm eye on the super Thursday event with no expectation to show any change in the monetary policy, but to provide any forward guidance to monetary policy stance moving forward. The retail sales figure is due to be released in the morning, hoping to provide the pound with some much needed uplift.

EUR 

Greece will tell its creditors that it cannot comply with labour reforms demanded by the International Monetary Fund as a condition of its support for the country's third bailout. The leftist government considers the IMF's demand as a ban on the right of workers to negotiate wages and conditions on a collective basis. A breakdown with the IMF on the issue could jeopardize its financing of the 86 billion euro ($96 billion) bailout and could undermine overall confidence in the deal.

Both the IMF and the EU say an inflexible labour force has helped to make Greece uncompetitive, contributing to its economic condition. Labour reforms are a sensitive issue for Prime Minister Alexis Tsipras, running a country with a 23.4 percent jobless rate, high levels of informal work and cash-strapped pension funds. 

USD

U.S. import prices fell for the first time in six months in August on weak petroleum and food costs, but the declining trend is slowing as oil prices stabilize and the dollar's rally fades. Wednesday's report suggested the near-term inflation outlook would remain tame, strengthening the argument for the Federal Reserve to keep interest rates steady next week. Import prices slipped 0.2 percent last month after gaining 0.1 percent in July. August's drop was the first since February and was led by a 2.8 percent decline in petroleum prices. The key driver of the fall in inflation, imported petroleum prices fell 3.6 percent in July.

Import prices have been constrained by dollar strength and cheap oil, also with sluggish wage growth; inflation is persistently running below the Fed's 2 percent target. 

Key Announcements

09.30 – GBP : UK Retail Sales m/m expected to decrease to -0.4%

12.00 – GBP : UK MPC Official Bank Rate Votes

12.00 –GBP : UK Official Bank Rate expected to remain the same

13.30 – USD : US Core Retail Sales m/m expected to increase to 0.3%

13.30 – USD : US PPI m/m expected to increase to 0.1%

13.30 – USD : US Philly Fed Manufacturing Index expected to decrease to 1.1

13.30 – USD : US Retail Sales m/m expected to decrease to -0.1%

13.30 – USD : US Unemployment Claims expected to increase to 262K