Currency market 2024 key data so far

UK summary GBPEUR up 0.85% YTD, steady against USD. December saw UK retail sales plummet by 3.2%, marking the most substantial drop since January 2021 and exceeding forecasts of a 0.5% fall, raising concerns about the possibility of the economy entering a recession in the fourth quarter. Earlier last week, the CPI report revealed an unexpected uptick in Britain's inflation rate to 4%. Additionally, the UK jobs report indicated a sharp deceleration in wage growth rates and a persistent decline in the number of job vacancies. Most major central banks are expected to cut interest rates this year, with the Bank of England expected to deliver its first reduction at their May meeting but the mixed data releases so far this year is making the outlook more uncertain.

4th Jan

Final Services CPI 53.4 v 52.7 (exp). Fastest increase in service sector activity for six months during December.

Mortgage Approvals 50k v 48k

10th Jan

BOE Gov Bailey testifies on the Financial Stability Report before the Treasury Select Committee, in London; Still focused on returning inflation to target = less chance of rate cuts near term.

12th Jan

GDP MoM 0.3% v 0.2% up from -0.1% previous. Reduced chance of technical recession

16th Jan

Jobs data. Av. earnings 6.5% v 6.8% - falling faster than anticipated. Proof of cooling labour market which is key to inflation coming under control and may allow interest rates to fall sooner then anticipated.

17th Jan

CPI YoY 4.0% v 3.8% - higher than expected. Vindicates Gov Baileys earlier comments suggesting still work to be done to get inflation under control.

19th Jan

Retail sales MoM -3.2% v -0.5%

US Summary US Dollar index slipped below 103.20 today, struggling to hold onto gains from last week. Stronger-than-expected US economic data and hawkish signals from Federal Reserve officials which dampened expectations for a March rate cut kept the dollar supported. In the latest Fed commentary, San Francisco Fed President Mary Daly said on Friday that she believes the US economy and monetary policy are in a “good place” and it is premature to think rate cuts are imminent. The odds for a 25bps rate cut in March by the Fed currently stand at 48%, much less than about 90% in the beginning of the month.

5th Jan

Non-Farm Employment change 216k v 168k. Headline numbers are strong from the December US jobs report with non-farm payrolls up. The unemployment rate held at 3.7% rather than rising back to 3.8% as predicted while wages are hotter than forecast. Unsurprisingly, Treasury yields and the dollar are on the rise as this report clearly helps to dampen talk of a potential March rate cut from the Federal Reserve.

11th Jan

CPI YoY 3.4% v 3.2% - Reduces chance of afore mentioned US rate cut in March.

18th Jan

Philly Fed Manufacturing Index -10.6 v -6.6 – worse than expected. Showing continued decline.

Eurozone EUR has struggled against both GBP and USD, down 0.8% against both. Coming in to this week EURUSD remains just shy of the $1.09 mark, remaining close to its weakest level since mid-December, as investors are closely eyeing the release of flash PMI data due on Wednesday and the European Central Bank's upcoming interest rate decision on Thursday. While expectations are for the ECB to keep monetary policy steady, the focus will be on President Christine Lagarde's remarks for any signals regarding the potential timing of interest rate reductions. Last week, a series of hawkish comments from ECB officials tempered expectations of an early rate cut, leading markets to price in approximately 130 basis points of rate cuts from the ECB this year.

4th Jan

German CPI 3.7% up from 3.2% in Nov

Euro CPI 3.8% up from 2.8% Nov.

German inflation ended a five-month period of dropping inflation rates in December as headline inflation came in at 3.7% year-on-year, from 3.2% YoY in November. The European inflation measure came in at 3.8% YoY from 2.3% in November.

5th Jan

CPI Flash Estimate YoY 2.9% v 3.0%

16th Jan

ZEW Economic Sentiment 22.7% v 20.2%

19th Jan

German PPI MoM -1.2% v -0.4%

Euro Summary;