Morning Report: 21 December 2015

21st December 2015 By: Ranko Berich

GBP Sterling finally put up a bit of a fight against USD on Friday, closing slightly higher against the greenback after a week of unrelenting losses, although the same cannot be said against the euro where the pound weakened. This week will contain a couple of relevant data releases, most notably Wednesday’s release of Final Gross Domestic Product growth for the third quarter. Today at 11:00 GMT, CBI Realised Sales data for December will be released.

EUR The euro strengthened against the US dollar on Friday, after weakening in the wake of last week’s Central Bank events in the US. Germany IFO Business Climate data was released, with the index that tracks economic optimism reading 108.7, slightly less than last month but nonetheless strong enough to indicate that the surveyed institutional investors and analysts had not lost confidence in the eurozone’s most important economy. Spain is in for a potentially torturous round of coalition negotiations after yesterday’s election failed to deliver a strong majority. Podemos, the anti-austerity party, made a strong showing at the polls, meaning that political risk due to a Greece-like rejection of austerity terms can be said to have increased for the euro. Today at 15:00 GMT, Consumer Confidence for the eurozone as a whole will be released.

USD The US dollar appears to be running out of steam somewhat after the burst of strength it enjoyed in the wake of last week’s historic interest rate hike from the Federal Reserve. However, more dollar strength could well be looming in 2016, as Fed decision maker Jeffrey Lacker implied that another four interest hikes in 2016 were probable if the economy and labour market continued to perform well. No data will be released today, but Final Gross Domestic Product growth for the third quarter will be released tomorrow, followed by Durable Goods Orders on Wednesday.

CAD Falling oil prices continued to weigh on the loonie last week, which fell to a fresh multi-decade low against the US dollar. Friday’s poor inflation data did not help the picture. The Consumer Price Index fell 0.1% month on month in November, and the Core CPI, which excludes energy, fell 0.3%. Wholesale Sales fell 0.6% month on month. All three statistics were worse than expected by forecasters. This week. Retail Sales data will be released alongside monthly Gross Domestic Product Growth on Wednesday.

UK News

  • Reuters. Fed hike clears path for BoE’s Carney – but not right away: The first U.S. interest rate rise in nearly a decade helps clear the way for a similar, long-anticipated move by the Bank of England. But even so, Governor Mark Carney will be in no rush to follow suit.
  • Daily Mail. Consumer confidence in the UK economy rises further, although the spending growth rate reaches a record low: Confidence in the UK economy grew last month thanks to low unemployment and improved wage growth, according to a report, but despite this consumers’ spending growth rate hit a record low.