Morning Report: 13 November 2015

13th November 2015 By: Ranko Berich

GBP Despite some fairly sharp intraday volatility yesterday, sterling ultimately ended trading little changed from open to close. The moves were driven by action on other major currencies, as fundamental data was light on the ground yesterday, with only a report by the Royal Institute of Chartered Surveyors’ House Price Balance showing that 49% of surveyors were reporting overall house price increases in their areas generating mild interest. That said, the Bank of England’s Chief Economist, Andy Haldane, spoke in London, reaffirming his reputation as the most dovish member of the Bank Monetary Policy Committee. Haldane, musing on the future of the labour market in an increasingly automated and technology centric economy, also found time to express his views that subdued domestic wage pressures and weak global conditions meant that rates may remain low in the UK for some time. Today at 09:30 GMT, Construction Output data will be released, followed at 14:30 by the Conference Board’s Leading Index, which attempts to amalgamate indicators that show the future direction of the economy.

EUR The euro strengthened yesterday, despite the best efforts of the European Central Bank’s Mario Draghi. Draghi, speaking before European Parliament in the morning, once again reiterated that the ECB would be very seriously considering extending its QE program. Draghi’s appearance had the usual effect in financial markets, with the euro initially selling off. However, the afternoon session saw the single currency recover powerfully, especially against the US dollar. Throughout this morning European Gross Domestic Product data will be released, with German and French data this morning already released roughly in line with expectations. Eurozone wide GDP will be released at 10:00 GMT.

USD Yesterday was an eventful day for the dollar, which ultimately sold off slightly after a plethora of Fed speakers ultimately fell short of the hawkishness markets were hoping for. Janet Yellen, Federal Reserve Chair, avoided directly commenting on monetary policy, perhaps a deliberate move considering the Fed’s crucial December meeting is only a few weeks away. Her colleague Charles Evans was not so shy, and lived up to his reputation as a dove by saying he had a lower view of the likely path of inflation than other FOMC members. Stanley Fischer, was less pessimistic, saying that he expected a rebound in inflation next year, the implication being that the Fed’s Vice Chair would be receptive to voting for a rate hike sooner rather than later. Yesterday’s fundamental data from the US was solid, with weekly Initial Jobless Claims remaining low and the Job Openings and Labour Turnover Summary report showing job openings soaring to 5.53m in September. Today will see more headline US data at 13:30 GMT, when October Retail Sales will be released alongside the Producer Price Index.

CAD CAD weakened yesterday as crude oil markets burst into volatility, with commodities in general coming under massive pressure. The WTI crude benchmark is at $41.9 as of writing, an astounding 4.5% below yesterday’s high. Crude Oil stockpiles continued to grow in the US yesterday, and the oil producing cartel OPEC said that the inventory “overhang” had grown bigger than it was in the financial crisis. Yesterday’s New House Price Index in Canada was an afterthought, showing 0.1% month on month growth and causing little change in CAD.

UK News

  • FT. UK trade blow as number of exporters falls: The number of UK companies who sell their goods and services abroad fell last year, dealing a fresh blow to the government’s drive to boost exports by the end of the decade.
  • Reuters. Bank of England’s Haldane sees no need for UK rate hike any time soon: Britain does not need an interest rate hike in the near future because wage growth has fizzled and the outlook for the global economy is uncertain, the Bank of England’s chief economist said on Thursday.