Fed to increase rate hikes in 2017

Despite yesterday being a fairly positive day on the economic data front, there was much movement for exchange rates to report on. The morning presented some positive figures for EUR Markit Service PMI for December posting an 0.6 improvement and EUR CPI figures up by 0.1%. UK Construction PMI also gave a positive result for December posting 1.4 above previous figures. UK Mortgage approval marginally up and Consumer Credit for November posted 1.926B up from predicted 1.600B.

As the day progressed the Pound continued to drift lower against the Euro while improving slightly against the US Dollar ahead of the FOMC minutes, which showed that the committee have increased its projections from two rates hikes this year to three, and with some members voicing concerns over the pace of hikes, the Fed has said that the hikes would be “gradual”. Not giving away too much on when the next hike can be expected.

As ever we have another relatively busy day for data releases with UK Services PMI due this morning at 9:30, followed by European PPI at 10:00 and the ECB release their Monetary Policy Meeting Accounts at 12:30. In the afternoon as usual the focus turns to the US with Initial Jobless Claims at 13:30, Markit Services PMI at 14:45 and Non-Manufacturing PMI at 15:00.

Lots to cause some slight movements today so if you have an upcoming requirement make sure you stay in close contact with your Currency Index account manager to be kept informed of exactly what is happening and how you can best secure a rate for your upcoming requirement.