The CBI’s UK retail sales beat forecasts to rise to -3 in November, up from October’s -10. Retailer confidence also hit a 7-month high and December’s sales are also expected to rise. Sterling got a bit of a lift from the data but political factors still held sway. Market confidence that the Conservatives would achieve a majority on December 12th powered Sterling support for most of the day. The Pound moved above 1.2900 against the Dollar and 1.1720 on the Euro; 6-month lows. The release of an opinion poll that showed the Conservative lead narrowing triggered a significant correction for the Pound, although there was solid support on dips. Firm global risk appetite and expectations that Sterling would benefit from any US-China trade deal also added to the underlying support.
The Pound is little changed this morning, floating near 1.2900 against the Dollar and just below 1.1700 on the Euro.
The US Chicago Federal Reserve (Fed) National Activity Index declined to -0.71 for October from -0.45 the previous month with all components in negative territory as the decline in industrial production had an important impact. Overall sentiment towards the economy was, however, more optimistic following the business confidence data released last month.
According to futures markets, the chances of further interest rate cuts in 2020 continued to fade which underpinned the dollar. Narrow ranges prevailed with the Euro settling just above 1.1000. Fed Chair Powell reiterated that the current monetary stance was likely to remain appropriate while also repeating that it would respond accordingly if there is a material reassessment of the economic outlook.
The German IFO business confidence index edged higher to 95.0 for November from a revised 94.7 the previous month and in line with consensus forecasts. The IFO stated that manufacturing was stuck in a recession and it was too early to talk of a turnaround in the economy, although retailers were expecting strong spending around Christmas.
Overall confidence in the Euro-zone outlook remained weak which hampered Euro support with the currency unable to make any headway. ECB Council member Holzman stated that the bank is on a good route to change the way policy decisions are decided. Over the medium term, this could suggest larger barriers to further monetary easing, but the immediate market impact was limited.
Narrow ranges prevailed yesterday with the Euro settling just above 1.1000. Fed Chair Powell reiterated that the current monetary stance was likely to remain appropriate while also repeating that it would respond accordingly if there is a material reassessment of the economic outlook. Market reaction to the comments were limited with the Euro holding around 1.1015 with not much movement since, as we start Tuesday’s trading session hovering in and around the same region.
Data to watch
15.00 USD - CB Consumer Confidence
15.00 USD - Richmond manufacturing Index
Posted in Daily Market News on Nov 26 2019