Intraday Market Thoughts

UK Jobs Improve, Onto Bank of Canada

by Patrik Urban
Jan 23, 2013 12:56

AUD CPI rose y/y but slowed q/q; positive labor market data from Britain; no surprises from MPC; Cameron to hold referendum on EU membership. Focus turns to the BOC and Eurozone consumer confidence. A new set of Premium Insights will be released later today. For Ashraf's latest on gold & Apple's technicals, please click here.

AUDUSD pushed higher throughout Asia and the London session as Q4 CPI rose 2.2% from previous 2.0% y/y. However, the q/q reading slowed dramatically to 0.2% from 1.4%. A rate cut at the February 5th RBA meeting still seems unlikely but markets pricing suggests 39% chance of a 25 bps cut, up from 34% yesterday. AUDUSD pushed to 1.0566 and now trades around 1.0555.

GBPUSD pushed higher on the back of solid labor market data. The claimant count declined 12.1K in December after falling 8.9K in November, the claimant count rate was steady at 4.8% and the ILO Unemployment rate ticked lower in November to 7.7% from prior 7.8%.

MPC meeting minutes did not surprise as they showed unanimous voting to keep the bank rate unchanged and voted 8:1 to leave the asset purchase facility at GBP 375 bln. David Miles wanted to add another GBP 25 bln again. GBPUSD jumped from 1.5801 to 1.5883 and now trades around 1.5855. In other news, British PM Cameron announced that if he wins the 2015 election, he would hold a referendum between 2015 and 2017 on whether to stay in the EU.

JPY continued to gain across the board. Japan's economic minister Amari is attending the World Economic Forum annual meeting in Davos so his comments will be in focus. Nikkei 225 lost more than 2% and USDJPY fell to 88.05.

The US session brings the BOC rate decision and statement at 10:00 am ET. The overnight rate will most likely remain at 1.0% and given the improvement in the labor market data and the PMI index, the statement will probably keep its hawkish bias. Eurozone consumer confidence is due at the same time and it is expected to remain depressed in January at –25 from previous –27. There are no reports from the US.

Act Exp Prev GMT
RBA trimmed mean CPI (Q4) (q/q)
0.6% 0.7% 0.7% Jan 23 0:30
Consumer Price Index (Q4) (y/y)
2.2% 2.4% 2.0% Jan 23 0:30
RBA trimmed mean CPI (Q4) (y/y)
2.3% 2.4% 2.3% Jan 23 0:30
Consumer Price Index (Q4) (q/q)
0.2% 0.4% 1.4% Jan 23 0:30
BoC Rate Statement
Jan 23 15:00
BoC Interest Rate Decision (JAN 23)
1% 1% Jan 23 15:00
ILO Unemployment Rate (NOV) ((3m))
7.7% 7.8% 7.8% Jan 23 9:30
Claimant Count Change (DEC)
-12.1K 0.0K -8.9K Jan 23 9:30
Claimant Count Rate (DEC)
4.8% 4.8% 4.8% Jan 23 9:30

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