False dawn for Brexit bunce
The Pound experienced a volatile session yesterday with GBPUSD taking back intra-day losses after reports that the UK and EU have reached an agreement on the Brexit bill. It is rumoured the UK increased the offer of a “divorce bill”, which could be worth up to EUR 55bn (currently £48.5bn). Despite the report being denied by a Government source, Sterling surged above 1.3400 against the Dollar and 1.1300 against the Euro.
Today’s focus will be Bank of England Governor Carney speaking at 2pm and Deputy Governor Ramsden speaking at 2.45pm.
The US trade deficit increased to -$68.3 billion yesterday which was coupled with a fall in Housing Price Index by 0.5% from the previous month to 0.3% for September. There was some daylight, however, for the Dollar in terms of data as S&P/Case-Shiller Home Price Indices rose 0.4% y/y to 6.2% and OECD forecasts for 2017 and 2018 growth both rose 0.1% from original forecasts.
A pool of speeches yesterday by several contributors to the US economy was more of a talking point for the Dollar. New York Fed President Dudley stated how he sees the US economy’s employment at full capacity and confirmed the plan for rate hikes is currently opposing tax cuts and trade barriers.
Further, in Fed Governor and new Fed Chairman Jerome Powell’s confirmation hearing yesterday, he remained optimistic in his approach to the US economy, stating how he pledges to reduce the Fed’s balance sheet to $2.5-$3 trillion, and reduce the tough rules set for US banks, along with maintaining overall flexibility. He also stated he will stick to Yellen’s monetary policy strategy.
On the whole, events in the US caused the Dollar to strengthen across its rivals but due to events outside of the US later in the day, Cable closed yesterday 1.3419 and against the Euro, 1.1866.
German import prices rose 0.6% m/m and 2.6% y/y in October, and Gfk consumer confidence remained flat at 10.7 in December. The annual growth of loans to non-financial corporations rose 2.9% y/y in October, while credit dynamics for households rose 2.7% y/y, the ECB statistics showed. Net lending in October reached a volume of €17.8 billion, last seen in December 2008, when lending was hit by the financial crisis.
Today’s calendar has Eurozone ESI economic confidence, preliminary inflation data out of Spain and Germany, U.K. money supply and credit growth, as well as French GDP and consumer spending.
Data To Watch:
09:30 GBP Consumer Credit (Oct)
09:30 GBP Mortgage Approvals (Oct)
10:00 EUR Services Sentiment (Nov)
10:00 EUR Business Climate (Nov)
10:00 EUR Industrial Confidence (Nov)
10:00 EUR Economic Sentiment Indicator (Nov)
13:00 EUR Harmonised Index of Consumer Prices (YoY) (Nov)
13:30 USD Gross Domestic Product Price Index (Q3)
13:30 USD Gross Domestic Product Annualized (Q3)
13:30 USD Personal Consumption Expenditures Prices (QoQ) (Q3)
13:30 USD Core Personal Consumption Expenditures (QoQ) (Q3)
14:00 GBP BOE’s Governor Carney speech
14:45 GBP BOE Ramsden Speech
15:00 USD Pending Home Sales (YoY)(MoM) (Oct)
15:00 USD Fed’s Yellen testifies
15:30 USD EIA Crude Oil Stocks change (Nov 24)
17:00 EUR German Buba President Weidmann speech
17:45 USD FOMC Member Williams speech
19:00 USD Fed’s Beige Book