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Trump Tax Triumph

Trump Tax Triumph

GBP
According to the latest report published by GfK (society for consumer research), the UK consumer confidence deteriorated sharply and hit a four-year low in December, exposing further downside risk for 2018. GfK said its key index fell by one point to -13, the lowest since December 2013, and below the level reached in the aftermath of the Brexit vote last year.

Damian Green, one of Theresa May’s closest allies, has been sacked from the cabinet after an inquiry found he had breached the ministerial code. Green was ‘asked to quit’ after he was found to have made ‘inaccurate and misleading’ statements over what he knew about claims pornography was found on his office computer in 2008.

Cable hit fresh two-day tops yesterday morning at around 1.3415 but was followed by a decline in the afternoon session to close at 1.3367. Sterling recovery attempts, however, remain capped as the bears retain control amid a cautious pre-Christmas trading outlook.

Today, markets assess the implications of the latest headlines citing that the UK government has demanded total secrecy in its free trade talks with the US for a post-Brexit deal. Hence, the pair awaits fresh impetus from the UK public sector net borrowing data due later in the session ahead.

USD

The Dollar showed some positive data yesterday, providing the economy with some strength but not enough to catch the market’s eyes. US existing home sales rose to 5.52 million in November whilst EIA Crude Oil Stocks change improved to -6.5 million (Dec15).

The main story resided in the tax bill being passed by both houses of Congress and now waits in the hands of President Trump to sign. We expect this to happen soon after the new year. Despite critics, the bill provides consumers, businesses, and investors with a fresh sense of optimism going forwards which transpired into gains for the Dollar yesterday.

As we head into the holidays, there’s still another round of data to watch as we have GDP figures and Core Personal Consumption Expenditure for Q3 whilst the Philadelphia Federal Reserve manufacturing index will provide further insight into the state of the US economy.

EUR

The Euro was among the top performers in the market yesterday with GBPEUR trading down at 1.1255 and EURCHF near 2017 highs above 1.1700.

Recent Eurozone data has been slightly underwhelming, but still strong enough to indicate that the Eurozone economy is seeing strong growth up until the end of 2017. Monday’s Eurozone Consumer Price Index (CPI) results met expectations in all major prints but let down investors hoping for stronger-than-expected inflation. Ifo’s German expectations and business climate surveys fell short of expectations in December. However, analysts put the unexpected drop down to the breakdown in German coalition talks and noted that the prints were still relatively optimistic overall.

After a strong performance from the Euro throughout the past year, investors are excited for another year of solid growth from the economy in 2018, despite concerns that Eurozone inflation will remain subdued for some time to come.

Data To Watch:
00:01 GBP Gfk Consumer Confidence (Dec)
09:30 GBP Public Sector Net Borrowing (Nov)
12:30 USD Philadelphia Fed Manufacturing Survey (Dec)
13:30 USD Chicago Fed National Activity Index (Nov)
13:30 USD Initial Jobless Claims (Dec 15)
13:30 USD Continuing Jobless Claims (Dec 8)
13:30 USD Continuing Jobless Claims (Dec 8)
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 USD Housing Price Index (MoM) (Oct)

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