Sterling peaked at a six-day high against the Dollar yesterday morning but the excitement soon petered out and the Euro traded sideways. The market is ignoring Brexit chaos, for now, preferring to wait for today’s UK inflation data and tomorrow’s Bank of England Interest Decision.
This morning, headline inflation is forecasted to drop to 2.3% for November year-on-year, down from 2.4% in October. Core inflation is also forecasted to drop 0.1% to 1.8% year-on-year but the Pound is unlikely to show much reaction unless the data is weaker than expected. The market appears to be positioning for another “buy the rumour and sell the fact” scenario on the EU rejecting improvements to the Withdrawal deal and a second Brexit referendum. With that in mind, the Bank of England is expected to hold rates until the future is more certain.
The Greenback traded with a negative bias yesterday as the US Federal Reserve (Fed) kick-started its two-day meeting. Investors are expecting a dovish hike of 25 basis points from the FOMC members and will be eagerly awaiting the Fed's Economic Projections report.
WTI Crude oil slid lower for the third consecutive session over concerns of increasing supplies, doubts over the effectiveness of recent output cut by OPEC, and a looming global economic slowdown.
The Greenback has appreciated nearly 5% against the G-10 currencies this year and the Dollar index is at an 18-month high.
The economic calendar is relatively thin today and trading is expected to err on the side of caution.
The Italian government released its revised version of its budget, with a deficit of just over 2% which is much more in line with the requirements of the European Commission (EC). It is still unknown if the EC will accept the changes, but if it is not we can expect to see much more volatility.
Versus the Dollar, the Euro is trading around the 1.1400 mark, and versus the Pound, around the 1.1115 mark. Tuesday saw the German IFO business climate fall fairly significantly, confirming fears that Germany’s economic issues were not just for Q3.
Brexit continues to dominate the news and geopolitical landscape, with very little Eurozone news due out today. We see CPI data from the UK, but otherwise focus will be on the Fed’s interest rate decision across the pond.
Data to watch:
09:30 GBP Retail Price Index (MoM) (Nov)
09:30 GBP Retail Price Index (YoY) (Nov)
09:30 GBP Consumer Price Index (YoY) (Nov)
09:30 GBP Core Consumer Price Index (YoY) (Nov)
09:30 GBP Consumer Price Index (MoM) (Nov)
13:30 CAD Consumer Price Index (MoM) (Nov)
13:30 CAD Bank of Canada Consumer Price Index Core (MoM) (Nov)
13:30 CAD Bank of Canada Consumer Price Index Core (YoY) (Nov)
13:30 CAD Consumer Price Index (YoY) (Nov)
13:30 CAD Consumer Price Index - Core (MoM) (Nov)
14:00 CHF SNB Quarterly Bulletin
15:00 USD Existing Home Sales (MoM) (Nov)
19:00 USD FOMC Economic Projections
19:00 USD Fed’s Monetary Policy Statement
19:00 USD Fed Interest Rate Decision
19:30 USD FOMC Press conference
22:45 NZD Trade Balance (YoY) (Nov)
22:45 NZD Exports (Nov)
22:45 NZD Imports (Nov)
22:45 NZD Trade Balance (MoM) (Nov)
22:45 NZD Gross Domestic Product (YoY) (Q3)
22:45 NZD Gross Domestic Product (QoQ) (Q3)
23:50 JPY Foreign investment in Japan stocks (Dec 14)
23:50 JPY Foreign bond investment (Dec 14)
Posted in Daily Market News on Dec 19 2018
About the author //
With more than 17 years experience in financial services, Head of Sales Rob guides PLCs and sole traders alike through the complex maze that is the foreign exchange market, helping them to save money and mitigate risk.
He has a wealth of experience and knowledge from holding numerous roles including various positions in investment banking and services in Front, Middle and Back offices. This gives him giving a particularly insightful view on customers’ problems and requirements. Rob also helps to keep our clients informed of the latest in the currency world with our daily market commentary.
GBPSterling remained on the back foot yesterday, trading above 1.2600 against the Dollar on wider US weakness and just above 1.1100 on the Euro. Overall, Sterling continues to trade at 20-month lows against the most major currencies as Pound sentiment remains weak.VIEW FULL ARTICLE
Posted in Daily Market News on Dec 18 2018 by Rob