UK inflation rises above expectations as markets continue to wobble over Greece
14/Nov/2012 • Currency Updates•
Sterling rallied against the dollar yesterday after UK inflation rose more than economists predicted in the month of October. Annualised UK CPI rose 2.7 percent, compared with a 2.2 percent advance previously and a higher rise of inflation than the 2.4 percent gain previously forecast. Many believe this rise was due to tuition fee hikes and booming food prices. The jump defied Bank of England expectations that inflation would fall towards it’s two percent target and might have been a factor in the Bank’s decision to hold fire on more Quantitative easing.
Little news out of the US yesterday as the currency was mainly affected more by events out the Eurozone and the UK. The dollar gained against the Euro as investors continued to worry about Greece’s debt crisis and it’s long delayed rescue payment from creditors. Between these Eurozone jitters and the US fiscal cliff many believe market worries are likely to persist. Crude Oil futures traded barely higher as the dollar moved lower. Key data to look out for today in the US is the PPI and retail sales out for October.
The main focus in the currency markets was around the Euro. The Euro hit more than a two month low against the dollar, weighed down by delays in aid for debt burdened Greece and the persistent uncertainty about whether Spain will seek a bailout. These worries over Greece and Spain has caused the Euro to lose massive ground against the Dollar. Greeces international lenders have given the country more time to fix it’s budget, although they did not disburse the aid Greece had hoped to use to refinance 5 billion euros of its debt by Friday.
In other main news, economic expectations in Germany fell well below consensus forecasts in November, the latest signs the Eurozone largest economy is likely to deteriorate over the next six months and the currency blocs debt crisis drags on. ZEW said its closely watched economic index fell to -15.7 in November from -11.5 in October.