Rational FX: BBA Mortgage Approvals figures expected to beat 2009’s [23/12/2010]

Yesterday’s Market Movers

• In the UK yesterday we had the Bank of England Minutes which stayed with a three way split. There was also a view on inflation for 2011 which is now expected to rise to 4%, this may encourage the MPC to increase interest rates as early as next spring.

• Also in the UK yesterday there were Current account figure. This figure is statistics of interest payments coming in and out of the UK including goods and services. The figure came out worse than predicted meaning there is over spending in the economy and shows a negative effect on the pound.

• As previously stated UK GDP (Q3) and (YoY) is a broad measure of Economic activity and we saw a slight movement in Sterling when the figure was released.  In previous figures the GDP figure had grown. The figure came out 0.1% below expectations showing the UK has not done well enough.

• US GDP was expecting a positive prediction at 2.8% but slumped a fraction to 2.6% showing slight weakness in the economy. This didn’t move the markets by margins but hit cable by about 20 pips stabilizing at 1.5420.

• US Existing home sales were expected to come in better than previous (YoY) and even though it did we saw it increase marginally.  This gave strength to the dollar sending GBP/USD to 1.5400’s and later bearing down to 1.5380’s. The spike in dollar was due to the increase of the house price index to 0.8% showing a stronger housing market.

Today’s market movers

• Today in the UK we will see the BBA Mortgage Approvals which are expected to come out better at a figure of 31.3K from a previous figure of 30.7K. If the figure comes out as predicted or better than previous it will prove positive for the pound showing that more home loans are being approved and it is positive for the economy.

• In the US data surrounding the Durable Goods Orders with an expected figure better than previous showing progression for the US economy and the USD. This is basically showing how much manufactures are spending on goods with longer shelf life.

• US jobless claims are also out today showing data about how many people are unemployed still throughout the country. The figures are due to remain the same as previous at 420K. Naturally if a better figure comes out you shall see dollar weakness.

• Also in the US we have Reuters/Michigan Consumer Confidence statement released. The figure is predicted better than expected at 74.5 from a previous 71.6, if a higher reading comes out as predicted it could prove Dollar positive and a lower figure doing the opposite.

• The final bit of data out today is the New Home Sales in the US which are figures showing how much people are spending on the property ladder and renovations. The data is predicted to come out better and if so will see strength for the Dollar as more money is being spent in the economy. Naturally a lower figure will show weakness for the Dollar as people wouldn’t be spending more therefore not pumping anything into that part of the economy.