The week starts here for currency rate news

12 November, 2014

Tom Arnold

It has been a very quiet start to the week, with little data of note out across all the major zones and no particularly interesting news pieces to stimulate the currency markets either. As a result we have seen very stable exchange rates, operating within tight ranges, and nothing much going on at all.

Today however sees a change in the week’s trend with various key data releases due out including some important news for the UK’s economy.

First up we have UK unemployment and average earnings. Unemployment has been getting better and better for some time now, but always with the back drop of lower than inflation earnings implying that the unemployment figure is in fact positively skewed by too many part time jobs. Average earnings are on the rise, but very slowly, and this will in fact probably be the more critical release today rather than the headline unemployment figure. A good jump in earnings will be good for the economy and therefore good for the Pound.

Secondly we have the Bank of England’s quarterly inflation report due, which is critical for the Pound as it will discuss inflation and the link to interest rate rises. Inflation has been dropping significantly recently and this lowers the chance of a need/desire for interest rate rises in the short term. Interest rates are critical for a currency’s strength as higher yielding currencies attract more investment, so a weak inflation outlook is likely to be very Sterling negative.

We also have European industrial production figures this morning and a few minor US releases this afternoon, which could have some impact on the market, but the focus will definitely be on the UK, and most keenly on what Mark Carney has to say at 10.30am.

In other news this morning we have had the announcement that five major banks have been collectively fined £2bn by regulators for rigging the Forex markets. The FCA and their US equivalent have stamped down very hard on this behaviour in order to preserve the integrity of the markets and specifically faith in the UK finance sector.

Here at Currency Index we are constantly striving to increase and improve the security of our industry and ourselves operate within the highest levels of regulation to protect our clients and their funds. Make sure you stay in close contact with your CI account manager to be kept informed of exactly what is happening on the markets and to discuss any security queries you may have.