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Enjoy your-elves, it’s Christmas!

Enjoy your-elves, it’s Christmas!

GBP
The GBPUSD pair dropped to a daily low of 1.3333 in the early hours of this morning before recovering its daily losses, fielding near the 1.3370 level.

There were no headlines to drive the Pound yesterday as the UK released a minor report that hardly affected the currency. Public sector net borrowing figures for November were released, decreasing by £3.1 billion to £48.1 billion in the current financial year-to-date, the lowest year-to-date net borrowing since 2007.

The UK will release the final version of its Q3 GDP figures today, seen unchanged at 0.4%, alongside total business investment and current account data for the same period.

USD

For the Dollar yesterday, there was a mixed bag of data but the Dollar lost its gains from earlier in the week. Philadelphia Fed manufacturing survey made gains to 26.2 in December whilst initial jobless claims rose 245k, beating market expectations.

However, key data in US third-quarter GDP was below market expectations as Q3 growth was 3.2%, 0.1% below the consensus, whilst core personal consumption decelerated to 1.3% in Q3. This Q3 GDP growth for the US economy does provide a backbone for hawks but the market wasn’t expecting the revised figure. Further, Chicago Fed activity index decelerated to 0.15 in November.

Today, important data in the form of core Personal Consumption Expenditure is expected to accelerate to 0.1% m/m and 1.5% y/y. US Durable Goods and US Personal Income are also due.

EUR

The EURUSD pair struggled for direction yesterday, as thin pre-holiday trading begun. Action around the pair was choppy, mostly led by stocks’ behaviour during the first half of the day, amid the absence of EU data.

Analysts at Danske Bank explained that the EURUSD reaction to the Catalan election has been rather muted and even if the Catalan call for independence re-intensifies in coming days, the potential for a marked drop in Euro on political uncertainty is limited in their view.

Meanwhile, EURUSD widened again yesterday following the relief seen earlier in the week. Year-end pricing of the currency pair’s FX forwards is still driving the market and, with a week to go before New Year, we could be in for a double-dip in the basis. The market expects the cross to stay within the 1.16-1.20 over New Year.
This Friday, attention will focus on German GFK Consumer Confidence survey for January

Data To Watch:
24h USD US Government Shutdown Limit
07:00 EUR Gfk Consumer Confidence Survey (Jan)
09:30 GBP Gross Domestic Product (YoY) (QoQ) (Q3)
13:30 USD Personal Income (MoM) (Nov)
13:30 USD Personal Consumption Expenditures – Price Index (MoM) (YoY) (Nov)
13:30 USD Core Personal Consumption Expenditure – Price Index (MoM) (Nov)
13:30 USD Personal Spending (Nov)
13:30 USD Core Personal Consumption Expenditure – Price Index (YoY) (Nov)
13:30 USD Durable Goods Orders (Nov)
13:30 USD Durable Goods Orders ex Transportation (Nov)
15:00 USD New Home Sales (MoM) (Nov)
15:00 USD New Home Sales Change (MoM) (Nov)
18:00 USD Baker Hughes US Oil Rig Count

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