December 13, 2024

“The Greenback strengthens as a result of the stronger-than-expected US PPI data for November, which surpassed market forecasts. The UK economy unexpectedly contracted 0.1% in October, following a similar result last month. Markets were predicting a 0.1% gain.”

Tim Hallinan – Trading Director

USD

The USD Index climbs above 107.00 early Friday, its highest in over two weeks, after closing positive all week. Thursday’s data from the US Bureau of Labor Statistics showed the Producer Price Index (PPI) for final demand rose 3% year-on-year in November, up from 2.6% in October and beating expectations. The annual core PPI also exceeded forecasts, rising 3.4%. Monthly increases for PPI and core PPI were 0.4% and 0.2%, respectively. Focus now turns to the Federal Reserve’s interest rate decision next week, with a potential 25-basis-point cut, though the PPI data could influence this outlook.

GBP

The Pound Sterling plunges against major peers on Friday after weak data revealed a 0.1% GDP contraction in October, mirroring September’s decline and falling short of expectations for 0.1% growth. Meanwhile, the GfK consumer confidence index rose slightly to -17 in December from -18 in November, beating forecasts of a further decline. Confidence remains under pressure due to government warnings about public finances and significant tax hikes introduced in the October budget.

EUR

The ECB cut the deposit rate by 25 basis points to 3.0%, with Christine Lagarde adopting a dovish stance and noting that a 50bps cut was considered but lacked support. Reports revealed some policymakers initially backed a larger cut, warning that the ECB might be overestimating growth, which could fall below 1% next year if Trump-era tariffs return. While stopping short of declaring victory on inflation, Lagarde signalled further rate cuts. Markets now expect 120bps of ECB cuts next year, far exceeding the 50bps projected from the Federal Reserve.

Markets

Europe’s Stoxx 600 index declined 0.1%, while a gauge of world stocks headed for the worst week in nearly a month. Nasdaq contracts led modest gains in US futures, signalling a partial rebound from Thursday’s declines on Wall Street in the wake of higher-than-expected US jobless claims and mixed readings on producer prices.

Main Economic Events (All Times CET)

1:00am: UK GfK Consumer Confidence
8:00am: UK GDP m/m

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