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Yesterday the main focus was on the Bank of England’s policy meeting and US inflation data. They were both non-events, as the BoE kept policy measures unchanged, although the statement that followed focused on the recent appreciation in Sterling, as it is expected to limit the inflationary pressure relative to the target in the medium term. Over in the US, headline CPI was in line with market consensus at +0.2%.
Staying in the US, despite the recent strength of the dollar, the latest manufacturing indicators were positive, as the Philadelphia Fed Manufacturing Index for December printed much higher at 21.5, against a consensus of 9.1 expected. The Empire manufacturing reading came in at 9.0 against 4.0 expected. The flash manufacturing PMI also printed at 54.2, up from the 54.1 reading last month. The job market is also in good health, as Initial Jobless Claims declined to 254k last week.
European data releases
In Europe, December flash PMI’s were out, and the composite reading for the Euro area came in unchanged at 53.9 for the month. The single currency extended its losses, falling to 14 year low against the US dollar, as the prospect of more tightening by the Fed is keeping demand for the greenback high. In Germany, the manufacturing PMI report came in stronger than expected at 55.5.
Data to come
The day ahead will see investors turning their attention to the CBI’s December industrial trends survey, which is scheduled at 11am and will be closely looked at, as it will provide a timely health check on the UK economy as we head towards the end of an eventful year. The consensus is to show a decline of -5% of firms, which reported a rise in orders in December. Markets will also receive the final November CPI revisions in Europe and trade data. In the US, November Housing Starts and Building Permits data will be released.
