Morning Report: 20 November 2015

20th November 2015 By: Ranko Berich

GBP Sterling’s two week rally versus USD and EUR once more reached new highs yesterday morning, though the release of disappointing retail sales data subsequently triggered a slight retracement. Core retail sales in October fell 0.6% month on month, which followed a 1.7% rise last month when sales were helped by the Rugby World Cup. The Office for National Statistics, which collates the date, cited department stores and clothing having a particular drag on the figures. Today, there are no major economic releases due for release from the UK.

EUR It looks like the euro found its legs yesterday, rallying against USD following a less-hawkish-than-expected FOMC minutes. Nonetheless, this rally has proved to be short lived as this morning comments from Mario Draghi, the President of the European Central Bank, have reinstated the likelihood of further expansionary monetary policy, which is hammering euro at the time of writing. There are no economic releases scheduled for today, but German price producer index was released earlier today, showing a 0.4% drop in October.

USD The dollar began to sell off yesterday afternoon, with markets weakening the greenback in the absence of any fresh dollar-positive data. However, the EURUSD downward trend appears to have resumed after Draghi’s comments earlier today, in which he highlighted the inflation risks the Eurozone faces, and pointed, again, towards a revision of the current monetary policy in December. There are no major releases scheduled today in the US, but William Dudley, voting member in the FOMC, speaks at 14.15 GMT.

CAD The “loonie” rallied against the dollar yesterday, recovering last week’s losses. Yesterday’s Bank of Canada’s Economic Review highlighted the headwinds the global and domestic economy are facing. The BoC empathized the slow recovery the country is experiencing after the crisis. Today’s Core retail sales are expected to contract after two months of expansions and Consumer price index is expected to be flat at 0.2%.

UK News

  • Reuters. Britain sees worst October for government borrowing since 2009: British public finances recorded the worst deficit for any October since 2009, leaving Chancellor George Osborne a challenge to meet his borrowing goals as he prepares a major review of government spending.
  • Reuters. Nationwide CEO sees 3-4 percent house price growth in “healthy” market: The boss of Britain’s second-biggest mortgage lender Nationwide said the UK housing market was “healthy and strong” and he expected house price inflation to continue at about 3-4 percent, although there could be a cool-down in the London market.