Morning Report: 09 November 2016

9th November 2016 By: Ranko Berich

GBP:  Sterling has seen an exceptionally wide range against USD this morning, at one point rising to almost 2% above the morning’s lows. But a rally in USD, helped along by a soothing victory speech from Donald Trump, has seen the pound give up the vast majority of its gains versus the greenback. The timings of the euro’s moves this morning have been similar, but the direction reversed. Sterling at first collapsed against the single currency before rallying. This morning also saw the release of the UK’s Goods Trade Balance, which showed a record deficit-consistent with what would be expected in the wake of sterling’s recent falls. Some good news has emerged for the UK economy this morning with the release of the BoE Agents summary, a report on the Bank’s take on business sentiment according to its own Agents’ interactions. The report found that business sentiment had recovered further from its post-referendum fall, although sterling’s performance for today at least seems to depend on global factors.


EUR:  The euro initially benefitted from a broad risk-off move in the wake of it becoming clear that Donald Trump would be the next US President, but has since pared its gains and is now trading only marginally above where it started this morning. No headline economic data will be released today, although the European Unions’ latest economic forecasts will be released today at 10:00 BST.


USD:  Donald Trump will be the next President of the United States, as this morning’s upset election has made clear, but the US dollar is rallying from this morning’s lows which were reached in the immediate aftermath of the result becoming clear. Trump’s policy platform and campaign statement certainly seem to contain plenty of fodder for USD weakness, including but not limited to $5 trillion in unfunded tax cuts and a trade spat with Mexico, not to mention the rest of the world. But for now, a reasonably conciliatory victory speech for Trump seems to have triggered a rally that has left USD only mildly weaker than this morning’s open against many pairs. The future is far from certain, and all eyes will be on the President elect as he begins to signal the direction of policy.


CAD:  The loonie is one of today’s bigger losers, as crude oil prices have taken a hammering from the broad risk-off sentiment that has been prevalent this morning. US crude oil inventories will be released today at 15:30 BST, and if last week’s massive inventory build is repeated more volatility could result.


UK news


Reuters:  Trump defeats Clinton in stunning White House upset. Worried a Trump victory could cause economic and global uncertainty, investors were in full flight from risky assets such as stocks, and the U.S. dollar sank. U.S. stock futures dived 5 percent at one point, worse than the sell-off caused by the British vote to leave the European Union in June that wiped trillions of dollars off world markets.


FT:  May under pressure to hold early Article 50 vote. Eurosceptics urge prime minister to precipitate showdown with pro-EU MPs. Theresa May is under growing pressure from pro-Brexit campaigners to press ahead swiftly with a House of Commons vote to trigger the Article 50 EU divorce clause, rather than wait for a Supreme Court ruling that may not come until January.


Reuters:  UK’s NIESR sees slight economic slowdown in 3 months to Oct. British economic growth probably slowed in the three months to October from a solid performance in the first three months after the vote to leave the European Union, a leading think tank said on Tuesday.