20130912

Good morning,

Another good day for the markets yesterday with positioning in favor of additional risk taking. Global stock markets were in a good mood with a few exceptions, and the US Dollar sold off for the fourth day in a row against the Euro and Pound Sterling. Geo-political concerns have taken a step back as the situation in Syria for the moment seems to be addressed from a more diplomatic point of view and in addition, we still have a week before the FOMC will take center stage. For the latter, markets are still quite sure, that the Fed will commence the tapering of assets. However, with no real news to the table and a well-performing Chinese economy, risk taking was on the bid.

Most interesting news bullet from yesterday was the better-than-expected UK employment data, which triggered a massive rally in GBP-related pairs. Cable took out the June highs at 1.5751 and has printed a high of 1.5831 in the aftermath. The ILO Unemployment Rate came out at 7.7% vs. 7.8% expected and Claimant Counts were lower than expected, so overall a very strong report, which will put the BoE to the test, should this continue.

Today, the key items on the macro side will be the EU July Industrial Production (exp at 0.2% vs. 0.3% prior) and US Weekly Claims (exp at 330k vs. 323k prior) and August Import Prices (exp. at 0.5% vs. 0.2% prior). In UK At 09:00 GMT, BoE Governor Carney will attend a Treasury Committee hearing on the August Inflation Report, and the market will for sure be listening in for any clues about the forward rate guidance from the BoE, which will affect the UK economic and market situation.

Have a nice day.