Morning Report: 24 December 2015

24th December 2015 By: Ranko Berich

GBP Sterling strengthened versus the dollar and the euro yesterday but not by much. This was mainly due to profit-taking during the quieter Christmas and New Year period as the pound has lost ground in recent weeks. The final reading of UK GDP from the third quarter of 2015 was released yesterday and came in at 0.4% on the quarter and 2.1% on the year. Both readings were worse-than-expected, although the market mostly ignored the news and focussed on moves in crude oil prices and USD. This morning will the release of the British Bankers Association Mortgage Approvals data, at 09:30 GMT.

EUR The euro fell versus the dollar for the first time in four days yesterday, leaving the single currency on course for a second year of losses, as diverging policies at the two economies’ central banks drive foreign-exchange markets. The 19-nation currency weakened against most of its 16 major peers as trading ebbed before the Christmas and year-end holidays. The Federal Open Market Committee raised interest rates in December while the European Central Bank said its asset-purchase program would run until at least March 2017, resulting in asset yields in the two markets diverging as US yields rise and those in the eurozone fall. No euro data will be released today.

USD The dollar has performing poorly against the rest of the G10 over the last 24 hours, with only the euro failing to strengthen against the greenback. Much of this may be a technical pullback due to the impressive recovery seen in crude oil over the last 24 hours. Yesterday’s Crude Oil Inventories data showed Crude Inventories finally beginning to shrink, after weeks of expansion. Durable Goods Orders data also released yesterday showed purchases of durable goods flat in November, after an epic 2.0% spike previously. Personal Incomes rose an impressive 0.3%, rounding off an afternoon of fairly decent data releases. Today at 13:30 GM, weekly Unemployment Claims data will be released.

CAD The improvement in crude oil prices seen over the last 24 hours has given the loonie a significant boost. If the rally in crude extends into a more substantial recovery, the Canadian dollar has a lot to gain, especially against the US dollar where it has weakened some 5% this month. Yesterday’s monthly Gross Domestic Product data showed the economy had not grown at all in October, while Retail Sales grew a meagre 0.1% after contracting 0.4% previously.

UK News

  • Reuters. UK banks approve 20 pct more mortgages in November: British banks approved 20 percent more mortgages in November than they did in the same month last year, the British Bankers’ Association said on Thursday.
  • Reuters. Slowing UK growth leaves Bank of England unhurried on rates: Britain’s economic growth has slowed markedly, according to data on Wednesday that supports expectations the Bank of England will not raise record low interest rates any time soon.