Pound Looks To Extend Yesterday?s Gains Against EUR, USD and AUD With Release Of Employment Data

Published: Wednesday, 14 November 2012 09:00 BST - Written by Frank Davies

STORY LINK Pound Looks To Extend Yesterday?s Gains Against EUR, USD and AUD With Release Of Employment Data

Today’s data schedule affords the Pound an early opportunity to build on yesterday’s gains with this morning’s release of key British employment data and the Bank of England’s latest inflation report. Yesterday’s broad Sterling strength was driven by a significantly higher than anticipated UK CPI inflation figure for October, proving that the old market adage ‘buy on the rumour, sell on the news’, still holds true. Expectations are low for today’s UK Jobless Claims Change data for last month, with the consensus amongst analysts being that there will be a ‘no change’ reading. Expect a sub-zero showing to cause a shift into Sterling-denominated assets by institutional investors.

The Bank of England’s monthly inflation report follows hot on the heels of the jobs figure at 1000hrs GMT. As is invariably the case with central bank commentaries, the exact words used in the report will be picked over by a host of ‘experts’ in an attempt to divine the future direction of the UK’s monetary policy. Any explicit policy announcements are unlikely, but the overall tone of the publication will determine the relative level of the Pound against the other majors during the remainder of this week’s session.

Elsewhere, this afternoon brings the release of a raft of US data releases. Highlights include Advance Retail Sales numbers for October and the latest set of Producer Price Index numbers. Expectations are that the US shop sales numbers will show a contraction from last month’s positive showing of 1.1% and that the annualised PPI data, (considered a reliable leading indicator of future price inflation in an economy), will show a marked increase to 2.6%.

The main event in the States comes at 1900hrs GMT when the latest set of Federal Reserve FOMC minutes are due for release. Any suggestion of more QE for the US economy will see the US Dollar give up some or all of its gains of the past week.

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