Today's Interbank rates -
POUNDS TO US DOLLARS 1.6041
POUNDS TO EUROS 1.1973
POUNDS TO AUSTRALIAN DOLLARS 1.6044
EUROS TO US DOLLARS 1.3399
EUROS TO POUNDS 0.8363
EUROS TO AUSTRALIAN DOLLARS 1.3404
POUND HEADLINES:
- The CPI rose by a record 1% month-on-month in December pushing inflation up to 3.7% year-on-year, significantly above the median for a 0.7% month-on-month and 3.4% rise on the year. The December month-on-month rise was the largest monthly gain ever seen in the index. Transport costs led the increase rising by a record monthly amount due to higher airfares and petrol.
- Core inflation also edged up to 2.9% from 2.7%, also above the median. For Q4, Inflation stood at 3.4% above the BOE's November Inflation forecast for 3.2%. Overall, this report will add significantly to Inflation fears and it is likely to boost expectations that the BOE will need to respond by raising rates earlier than previously expected.
- The recent rise VAT rise from 17.5% to 20% could further fuel Inflation, which has now remained above the 2% target by one percentage point or more for 13 months.
- The EU Finance ministers' meeting has so far produced little of note, and it looks like the reasonable results from last weeks auctions have made the politicians assume they have time to come up with new initiatives.
- This may be a misapprehension, as the auctions were bolstered by EUR 2.3bn of ECB buying in the proceeding week, and the ECB may not provide this much support indefinitely. Nevertheless, ZEW may provide some more euro support today, and the Spanish bill auctions will be ignored, unless they are surprisingly poor.
- There is potential for the USD to gain some support from Empire Manufacturing Index today, which is the first of the January numbers which typically provide some lead on the ISM.
Kris Charalambides
FX Brokerwww.imsfx.co.uk
Tel: 0207 183 2790
No comments:
Post a Comment