A Sterling end to the week
The latest remarks from the EU Commission Chief Juncker triggered a fresh selling wave around the Pound yesterday. Moreover, the UK Times reported that the Prime Minister Theresa May is expected to back down on Brexit date plan, which will also keep any recovery moves short-lived.
Sterling experienced a large price movement, initially having rallied to weekly highs of 1.3460 on solid UK retail sales numbers before breaching the 1.3400 support on the release of the Bank of England (BoE) policy statement.
Looking ahead, the BoE MPC member Haldane’s speech is eagerly awaited as well as the bank’s quarterly report.
US retail sales showed a strong outing yesterday as forecasts suggested a downturn in sales but instead, they rose 0.8% for November whilst core retail sales rose 1% m/m. Initial jobless claims rose 228k and manufacturing PMI accelerated past expectations to 55.0. That said, Market PMI recorded a 15-month low of 52.4.
Uncertainty over the progress of the U.S. tax bill continues to linger but agreements were made between Republicans in the Senate and the House of Representatives. A settlement on a reduction of corporate tax came to 21%, which is down from initial efforts of 35%. The Republicans hope to vote on the legislation next week.
Eurozone Flash manufacturing PMI rose to 60.6 for December whilst Markit Services and Composite PMI also showed a firm outing with all beating market forecasts. Further, French manufacturing PMI showed a surprisingly strong reading whilst German manufacturing PMI recorded an all-time high of 63.3. French CPI rose 0.1% m/m but declined to 1.2% y/y as Spanish CPI increased to 0.5% m/m and 1.7% y/y.
The European Central Bank’s (ECB) monetary policy meeting saw monetary policy unchanged, with interest rates remaining at 0% with the deposit rate at -0.4%, but the ECB altered its economic projections for 2018 to growth at 2.3%, up by 0.5% That said, inflation was expected to remain below the 2% inflation target rate by 2020.
Data To Watch:
10:00 EUR Trade Balance n.s.a. (Oct)
10:00 EUR Trade Balance s.a. (Oct)
13:15 GBP MPC Member Haldane Speech
14:15 USD Industrial Production (MoM) (Nov)
14:15 USD Capacity Utilization (Nov)
18:00 USD Baker Hughes US Oil Rig Count