Daily Market Update

Sterling Lower on Slow Wage Growth

September 13, 2017

The U.S. dollar held familiar ranges overnight as light volume and a lack of major economic events led to lethargic trading. The Bloomberg Dollar Spot Index erased some of its gain from earlier in the week.

USD

The U.S. dollar held familiar ranges overnight as light volume and a lack of major economic events led to lethargic trading. The Bloomberg Dollar Spot Index erased some of its gain from earlier in the week.

This morning’s economic data showed that wholesale prices in the U.S. remain low. The producer price index rose 0.2% month over month after a 0.1% drop in July. The majority of the price jump can be attributed to a rise in energy costs. The so-called “core” reading that excludes food and energy rose only 0.1% month over month. The greenback has shrugged off the data as it was mostly in line with expectations.

Tomorrow’s consumer price index and Friday’s retail sales and industrial production are the likely market movers left on this week’s docket.

 

EUR

The Euro is mostly unchanged overnight, as the common currency mostly ignored economic data. Eurozone employment rose 0.4% in Q2 adding to the story of an improving labor market. Eurozone industrial production added 0.1%, meeting expectations.

European Commission President Jean-Claude Juncker gave his annual address to the European Parliament and held an optimistic tone saying “the wind is back in Europe’s sails.”

 

GBP

The British pound was traded slightly weaker overnight on a mixed jobs report. U.K. unemployment fell to 4.3%, the lowest rate in over four decades. Despite a tightening labor market, wage growth is still lagging behind inflation. Basic pay rose an annual 2.1% in the three months through July, unchanged from the second quarter. Inflation is just shy of 3%, highlighting a squeeze on Britons’ real incomes. The print dampens expectations that the Bank of England can move towards raising interest rate any time in the near future. The Bank of England meets tomorrow.

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