Caution – Autumn Statement
UK government borrowing rose to £8bn for October from £7.5bn the previous year, although the shortfall for the first seven months of 2017/18 declined to £38.5bn from £42.6bn.
CBI industrial produced a strong reading with orders increasing to 17 for November from -2 the previous month, the strongest reading for close to 30 years, while exports demand also strengthened sharply.
The Bank of England’s (BoE) Vlieghe stated that waiting for a rate hike to be necessary likely meant that it was too late to act effectively. The BoE’s Saunders warned that there would be a further pass-through impact from Sterling depreciation and Cunliffe maintained his generally dovish policy outlook. Markets remained cautiously optimistic that progress would be made in Brexit talks which underpinned Sterling, but not enough to break resistance at 1.1300 against the Euro. There was further Sterling resistance above 1.3250 versus the Dollar.
The Chancellor will announce his budget around midday today and the political reaction and changes in economic forecasts will be watched very closely.
The US Dollar was seen trading in a mixed fashion as the Dollar weakened against the Yen whereas the price action against the Euro was subdued. On the economic front, data was also limited. Federal Reserve (Fed) Chair, Janet Yellen spoke yesterday and said that the central bank was reasonably close to achieving its dual mandate. She also said that interest rates in the US will start to rise gradually. However, her comments did not move the markets much.
Looking ahead, the US durable goods orders data will be coming out today. Economists polled expect to see core durable goods orders rise 0.4% on the month, slower than the 0.7% increase seen the month before. Headline durable goods orders are also expected to rise just 0.4% on the month after rising 2.0% previously.
The FOMC meeting minutes will be the main highlight of the day, with the Fed’s minutes unlikely to show any surprises.
It was a very quiet day for the Euro yesterday with no market-moving data. European Central Bank’s (ECB) Benoit Coeure, the man responsible for the ECB’s money-printing programme, expects the bond-buying pledge to be dropped by September. Although not a market mover, confidence from the asset-purchase programme from the ECB’s Market Operations Director will certainly give the Euro a firmer backbone.
Further, talks between the UK and EU in the ongoing Brexit saga have now got to the stage where they aim to agree on a divorce deal in three weeks’ time. Markets remained cautiously optimistic as it could mean a total UK offer of £38 billion to be paid to the EU.
The calendar for today does not have much for the market to get excited about, with preliminary Eurozone consumer confidence due this afternoon. Further, the EU’s non-monetary policy’s ECB meeting takes place and the German 10-year Bund auction.
Data To Watch:
08:00 EUR Non-monetary policy’s ECB meeting
12:30 GBP Autumn Forecast Statement (Budget)
13:30 USD Initial Jobless Claims (Nov 17)
13:30 USD Continuing Jobless Claims (Nov 10)
13:30 USD Durable Goods Orders (Oct)
13:30 USD Durable Goods Orders ex Transportation (Oct)
15:30 USD EIA Crude Oil Stocks change (Nov 17)
19:00 USD FOMC Minutes