Manufacturing production also exceeded estimates rising 0.9 per cent against an upwardly revised 0.2 per cent in November this represents an annual contraction of 1.9 per cent. The pound rallied on Industrial and Manufacturing data but lost steam on the back of the quarterly inflation report which indicated inflation remain subdued and would fall short of targets given a tightening of monetary policy. The report also noted the strength of the recovery of the British economy is highly uncertain describing its pace as slow.
US equity markets posted some less than convincing results as investors pondered a statement by Fed Chairman Ben Bernanke which indicated the central bank may raise the interest rate charged to banks for borrowing short-term funds. We also saw US Trade deficit widened to US$40.2b in the month of December from a previous US$36.4b deficit. Market estimates had called for the deficit to widen to just $36.8 billion.
Locally, the much anticipated Employment figures will be released this morning at 11:30 AEDT. The Australian economy is expected to 15,000 new jobs created in the month of January against a previous surge of 35,200 which will edge our unemployment rate from 5.5 to 5.6 per cent. We expect Aussie dollar movements will be highly contingent to this data, which is sure to reignite the interest rate debate. At the time of writing the Aussie is buying 87.5 US cents - we expect some moderate upside on the local unit given stronger than estimated employment data.