Early this morning, UK has released a really good figures:
-Average Earnings Index + Bonus (2.7% vs 2.1% expected)
-Average Earnings Index Ex Bonus (2.7% vs 2.5% expected)
-Claimant Count Change (-6.5k vs -12.3k expected)
BoE MPC voted 9-0 to keep interest rates unchanged. It didn´t surprise me, because if we think carefully it is not the appropriate moment to do it. One of the reason is the disorderly outcome on Greece is a significant risk. Another task is the fiscal consolidation in order to weigh on growth. . Let´s see how the UK officials resolve the housing risks. The best new is the increase of salaries because it can boost the demand and consumption.
what was the impact of these news on the fx markets?
As you can see in both charts the Sterling Pound (GBP) has strenghtened versus the other currencies.
Short-Sterling curve steepened aggressively following the good figures about the UK wages.
Doubts about Greece
Greece is the biggest concern in the market. After the IMF broke the talks with Greece, all people are concern about how can affect to the different assets in the market. It was clear that the Greek government would decline the troika proposals. It's really difficult to know the consequences of a Grexit. I guess it would be a political mess. In the short term it can affect the financial markets, but not in the long term if Europe become strong.
FOMC minutes
The analyst don't expect a interest rate hike decision. The US macroeconomic data is really good. The US economy is improving. A lot of banks criticise the quantitative easings, because they have increased the inequality and they are creating a bubble in the housing market. They wont raise the interest rate in this occasion because the disorderly outcome on Greece is a significant risk, the geopolitical riots in Ukraine, the doubts of the corporate debt in China. The decision of raising the interest rates is quite tricky at the moment. The Fed has to be sure about the impacts of a interest rate hike.
#trading #fx #US #UK #Europe #FOMC #investments #FED #BoE
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