Morning Report: 23 December 2015

23rd December 2015 By: Ranko Berich

GBP After a respite on Monday, sterling’s downwards trend against the US dollar resumed in earnest yesterday, while also losing ground to the euro. Consumer Confidence, as measured in a survey by GfK, rose slightly in December, while remaining low compared to levels seen earlier in the year. This morning the final release of Gross Domestic Product Growth in the third quarter showed that growth was slightly slower than previously expected. The economy expanded 0.4%, as opposed to the 0.5% expansion that was previously thought. Business Investment grew 2.2%, while the Index of Services rose 0.5%, less than the 0.7% recorded previously.

EUR The euro did strengthen to reach a fresh high against the US dollar yesterday, but has since fallen off slightly, indicating that the small upwards trend seen since Friday may be beginning to age. Yesterday’s data showed German Import Prices falling 0.2% month on month, a pretty grim sign for inflation in the eurozone as a whole. GfK’s German Consumer Climate Survey showed consumer confidence basically stable in the German economy.

USD The dollar has clawed back some of yesterday’s losses versus the G10 overnight, most notably against European and Scandinavian currencies. US GDP was confirmed to have grown at an annualised rate of 2.0% in the third quarter, slower than earlier estimates but nonetheless a fairly decent result that shows the economy is growing at roughly the rate the Federal Reserve reckons to be its medium term potential. Existing Home Sales fell sharply in November, after several very strong months. However, the Richmond Manufacturing Index, a business survey conducted by the Richmond Fed, showed a surprising improvement in business conditions for December. Today at 13:30 GMT Durable Goods Orders data will be released, alongside Personal Income statistics. Later in the afternoon New Home Sales data will be released at 15:00.

CAD CAD continued to languish near multi-decade lows yesterday, but did not see any further significant losses. Today’s data releases will be important for determining if the Bank of Canada is likely to be forced into more monetary easing. Monthly Gross Domestic Product growth data will be released at 13:30 GMT, accompanied by monthly Retail Sales. Later in the afternoon, Crude Oil Inventories will be released in the United States, at 15:00.

UK News

  • Reuters. UK economic growth revised down: Britain’s economy grew less strongly than previously thought in much of 2015, according to official data that is likely to surprise the Bank of England as it ponders when to raise interest rates.