Morning Report: 11 November 2015

11th November 2015 By: Ranko Berich

GBP Sterling continued to recover yesterday, strengthening against both the euro and USD. Little headline fundamental data was released, although the British Retail Consortium did release its Retail Sales Monitor, which showed a 0.2% fall year on year in Retail Sales, down from 2.6% growth previously. This week’s Black Friday shopping spree may correct this deficit. The Bank of England’s Jon Cunliffe gave a speech in Geneva, but gave few hints on the direction of policy, instead musing on the importance of the credit markets and how macro prudential policy can counter cyclical risk in the economy. The Bank of England will conduct its first ever Open Forum for the public today, pitched as an “open discussion on the role of markets in society”. In addition to a speech from Mario Draghi of the European Central Bank at 13:15 GMT, Governor Mark Carney will speak at 17:00 to close the event. A more material event for sterling will be the release of monthly labour market data at 09:30, with the Unemployment Rate released alongside the Average Earnings Index.

EUR Eurodollar plunged to fresh lows yesterday, extending the euro’s weeks long losing streak. Bundesbank head and European Central Bank decision maker Jens Weidmann, speaking in Frankfurt, argued against a hasty move on inflation from the ECB, saying that he could not currently see the case for further easing. In the meantime, French Industrial Production data showed a small 0.1% expansion, nonetheless impressive after last month’s 1.7% spike and consistent with the general improvement in economic conditions the eurozone is currently experiencing. Today, German Wholesale Prices were reported to have once again contracted, with October’s data showing a 0.4% fall. Mario Draghi, ECB President, will speak in London at 13:15 BST.

USD The dollar continued to strengthen against most of the G10 yesterday, but did weaken slightly to a resurgent sterling. The NFIB Small Business Index was flat in October, indicating no change in overall optimism about business conditions among those surveyed. Import Prices were reported to have fallen 0.5% in October, marking five months of declines. This is a negative drag on inflation, which remains well below target in the US. August Wholesale Inventories rose 0.5%, their largest gain in three months. This is a rather ambiguous release, as it’s possibly a bearish sign for future business spending due to the possibility of an inventory glut, or alternatively a sign of businesses stocking up for the holiday shopping season. Today is a Bank Holiday in the US due to Veterens Day.

CAD After weakening dramatically last week, the loonie has been subdued this week, with USDCAD trading in a tight range. Today is Remembrance Day in Canada meaning banks will close and there will be no data releases, so CAD will trade on momentum and developments elsewhere, especially in crude oil markets.