We saw a fairly lacklustre European session yesterday but still managed some modest gains despite concerns that this Friday’s EU inflation and GDP data could well be disappointing.
Once again investors are looking towards some fairly positive company results, and it is this, in the absence of any other negative influences, which are helping to underpin markets at the moment, along with the propensity for US markets to continually make record highs.
In the European trading session today the focus is set to be on UK unemployment and wages data
and the Bank of England inflation report, as well as the latest EU industrial production numbers for September.
Over the past few weeks expectations of a rate rise in the UK have been slowly pushed back from early 2015 towards a date beyond next year’s General election
date in May. Given the recent slowdown in some of the more recent economic data this shouldn’t really have been too much of a surprise, given the problems currently chilling economic activity across Europe.
In reality the prospect of a rate hike before May next year had always been a remote one
given the fact that inflation has been consistently running well above the rate of wage growth, however the timing hasn’t been helped by some of the inconsistent messaging coming from the Bank of England and in particular Mark Carney who has blown hot and cold on the timing on when rates might rise.
With inflation set to fall further
in the coming months due to the recent falls in oil and other commodity prices, today’s latest inflation report is likely to reinforce the prospects of a delay in any prospect of a rate hike.
Depending on how dovish the inflation report is we might also get an insight as to whether there was any change in the mathematics in the voting
at last week’s MPC meeting, and whether or not McCafferty or Weale felt compelled to change their votes to raise rates.
The Bank of England is likely to downgrade not only its inflation forecast, but also its growth forecast as well
. On the data side just before the inflation report we could well see a rise in average earnings from 0.9% to 1.1% for the three months to September, which would be very welcome as we head towards the end of the year, bringing us ever closer to the current CPI inflation rate of 1.5%.
Also on the plus side the ILO unemployment rate is set to fall further from 6% to 5.9%
and its lowest level since November 2008.
EU industrial production is expected to show a rise of 0.7%
, up from a decline of 1.8% in August, though given the really disappointing numbers from both Greece and Italy earlier this week, which missed expectations by quite some distance, we could see these numbers come in short of expectations.
– a day of meandering sideways yesterday well above last week’s new 2 year low at 1.2358 keeps the prospect of a short squeeze on the table. We need to move above the highs this week at 1.2510 to target a move towards 1.2570, which we would need to move beyond to target 1.2800. This might delay the move towards 1.2040 and the 2012 lows.
– a fairly quiet session yesterday trading well above last week’s low at 1.5795, we are still the same descending wedge formation with support at 1.5795 and the 1.5720 area. While below 1.5930 the risk remains for a move through last week’s low at 1.5795 towards 1.5720. The current rebound needs to get beyond 1.5930 to suggest a move back towards 1.6070.
– no change here with selling interest just above 0.7870 and support at the 0.7800 level, a break either side should determine the next move. We need to get through the 0.7940 level to stabilise. A break below the 2012 lows at 0.7754 is the main obstacle to further declines towards 0.7690, the October 2008 lows.
– we saw a sharp move through the 115.55 tweezers top yesterday peaking at 116.10 and negating Friday’s bearish reversal in the process. This unexpected turn suggests that the move to 120.00 could happen sooner rather than later. Given the recent strength of the up move it’s not unreasonable to expect a pull back before a move higher to 120.00, unfortunately picking the turning point is likely to be difficult
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