Wednesday was a pretty quiet day for the markets with very little in the way of data for traders to go on. Early doors the pound lost value across the board following the release of the Halifax house price figures which came out under expectation showing negative growth for last month. From a 4 percent growth reading in May, we were expecting a much lower growth figure for June of 0.2 percent, although we actually saw a -0.6 percent figure. Despite it being the 4th month in a row of dropping prices, the wider view is that signs show little evidence of an overall slowdown. With nothing else to go on, traders sold off sterling over the morning trade losing around 0.5 percent value against most major currencies.
Once the US markets opened, the trend reversed and sterling regained all its losses as the rest of trade played out, paying sentiment to the underlying feelings over the UK house market. The only data release was for Canadian housing starts, which posted a slightly better figure than forecast but made little waves on the GBP/CAD rate. The markets were looking toward to the evening which saw the release of the Fed Reserve minutes from the last policy meeting and a speech by ECB chief Mario Draghi. Firstly the Fed minutes didn’t really throw up many surprises, just re-confirming thinking that the Fed will be looking to wind up the current QE program by October this year as long as the economy progresses as expected and we promptly saw the greenback lose value against both sterling and the euro. Meanwhile, Mario Draghi commented that the ECB’s current easing of monetary policy would not be effective if governments allowed their countries to slide back, suggesting an overall authority should be in place to make sure they were doing what they could to strengthen their economies.
Overnight, the Australians released their unemployment rate and employment change rates for June, showing a mixed result. Unemployment rate was a touch higher than forecast whereas the employment change rate showed a better than expected figure of 15,900 compared to the analyst predicted 12,300, both of which were vastly up on last months -5,100. The Aussie reacted badly to the data, losing half a cent to sterling right away.
So on to today, which is a lot busier than yesterday. UK trade balance and inflation figures from a few EU countries come this morning ahead of the Bank of England MPC meeting at midday. We expect no change so will have to await the minutes in a couple of weeks for any guidance unless Governor Mark Carney releases a statement at the time. A few low key US releases in the afternoon round up the day.
With much more to go on than yesterday, we should see some movement so if you have a transfer to make be sure to give the team at CI a call to discuss your requirements.