GBP

The main news from the UK yesterday was the unemployment
data out from the UK. The headline unemployment rate fell from 7.4% to 7.1%,
its lowest level in 5 years, beating the expectations of 7.3%. But more
importantly edging ever closer to the Bank of England’s target of 7%.

280,000 new jobs were created and of those 220,000 were full
time jobs.

GBP

The main news from the UK yesterday was the unemployment
data out from the UK. The headline unemployment rate fell from 7.4% to 7.1%,
its lowest level in 5 years, beating the expectations of 7.3%. But more
importantly edging ever closer to the Bank of England’s target of 7%.

280,000 new jobs were created and of those 220,000 were full
time jobs.

The MPC minutes also
show that the bank voted 9 – 0 to keep the BoE’s bond buying program at £375bn
per month and policy makers said they saw no immediate need to raise the
interest rate even if the unemployment rate got to 7%.

Also, workers in
the UK continue to see their wages lag behind inflation, with inflation running
at 2.1%, average page has only gone up 0.9% so in real terms we are all still
worse off.

On the back of
this sterling gained across the board yesterday, with GBP/EUR hitting 1 year
highs and GBP/USD hitting multi year highs.

CAD

The Canadian dollar weekend significantly yesterday. The Bank
of Canada kept its interest rates at 1% but has lowered its inflation forecast,
saying that inflation has been lower than expected and won’t return to its
ideal target for about two years. 

They believe inflation will move down to 0.9% in the first
half of 2014, down from its previous forecast of 1.2% – putting pressure on the
BoC to maintain interest rates at 1% or to possibly even lower it further.

The Canadian dollar has also weakened significantly
overnight following worse than expected data from China’s manufacturing sector;
the sector has contracted to 49.6. GBP/CAD is now trading at the highest level
since July 2009.

AUD & NZD

Both commodity based currencies have weakened across the
board as well following the poorly received data from China. As China is the
biggest trading partner for both countries, a slowdown in activity would affect
exports for both nations and thus would be detrimental for both economies.

GBP/AUD is now at the highest level since September 2009.

Today

This morning we have already had manufacturing and services
data that have come out from Germany, France and the Eurozone as a collective;
all of which have improved slightly from the previous month.

Spain’s unemployment has also risen slightly from the
previous quarter, rising from 26% to 26.03%.

From the US today, initial jobless claims are expected to
stay the same at 326,000 and continuing jobless claims are meant to fall
slightly.

Key Announcements:

13.30pm – USD – Initial Jobless Claims (Jan 17): Expected to
remain at 326,000.

13.30pm – USD – Continuing Jobless Claims (Jan 11): Expected
to fall to 2.93mn.

13.58pm – USD – Markit Manufacturing PMI (Jan): Expected to
remain at 55.

15.00pm – USD – Existing Home Sales Change (Dec): Expected
to increase to 0.4%.