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Bull in a China shop

Bull in a China shop

GBP
Sterling dipped to a weaker level during Wednesday’s early morning trading session with further concerns surrounding government uncertainty. The Bank of England’s (BoE) agents report indicated that manufacturing growth has strengthened while overall activity was seen to be steady. There was evidence of an increase in wage growth as the availability of workers declined whilst wage settlements are expected to increase further during 2018, in turn, nudging inflation higher.

BoE external Monetary Policy Committee (MPC) member Ian McCafferty stated that there was a high degree of uncertainty surrounding the economy and that he couldn’t say whether there would be a further interest rate increase.

Overseas Development Minister Priti Patel announced her resignation yesterday, yet Sterling was able to resist further losses seen over the past week with further support below 1.3100 against the Dollar while GBPEUR was trading at levels around 1.1230. The slightly steadier Sterling tone continued this morning despite a dip in the Royal Institution of Chartered Surveyors (RICS) house-price index to 1% for October from 6%.

USD

The Greenback struggled for direction yesterday against the backdrop of renewed skepticism over the tax reform sponsored by the White House. In this regard, Republicans are expected to unveil further details later today. The recent Democrat wins in state elections have added to the already growing doubts over expectations of an implementation of Trump’s tax reform plans by year-end, all weighing down on the Buck.

All eyes remain on Donald Trump’s tour of Asia as he lands in China today. He is expected to discuss trade and North Korea with Chinese leaders in Beijing. With the U.S. President softening his aggressive rhetoric towards North Korea earlier in the week, by urging the nation to come to the negotiation table, it will be interesting to see how the meeting with his Chinese counterpart, Xi Jinping, plays out.

Today in the US docket, we see initial claims and wholesale inventories whilst USD price-action will be mainly driven by the US politics.

EUR

Coming to the end of a very quiet week for the Euro, investors have taken a more reflectionary stance following the blockbuster events of last week. That said, today we see Brexit negotiations resume but with time running out for the two counterparts, there are doubts over whether any progress will be made. I should be noted that reports have surfaced that Theresa May is willing to agree to the €60 billion divorce bill demanded by the EU. If an agreement over the divorce bill is reached, this will certainly get the ball rolling for further talks.

Further today, investors will turn their attention to EU Monetary policy that will be back in question as European Central Bank (ECB) officials deliver speeches. This will include Swiss National Bank, ECB & German President Speeches which be after the ECB’s latest economic bulletin.

Data To Watch:

00:01 GBP RICS Housing Price Balance (Oct)
07:00 EUR Trade Balance s.a. (Sep), Exports (MoM) (Sep), Current Account n.s.a. (Sep), Imports (MoM) (Sep)
09:00 EUR Economic Bulletin
10:00 EUR European Commission Releases Economic Growth Forecasts, ECB Cœuré Speech
13:00 GBP NIESR GDP Estimate (3M) (Oct)
13:30 USD Continuing Jobless Claims (Oct 27), Initial Jobless Claims (Nov 3)
13:45 EUR ECB Vice President Vitor Constancio speech
18:00 EUR German Buba President Weidmann speech
18:20 EUR ECB’s Lautenschläger Speech

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