Morning Report: 29 December 2014

29th December 2014 By: Admin

GBP First of all, we hope everyone had a great Christmas and is looking forward to the New Year’s festivities. Markets have taken the festive break as a period to bid sterling slightly higher, managing to bounce off fresh lows against USD and climbing towards the top of its range on GBPEUR. The low liquidity in the markets at this time mean that sharp moves in either direction are possible, but with no data or news out relating to the pound today, any moves will have to be flow-driven by companies that need to close out positions before year end, rather than speculative positioning.

EUR The euro is the markets major focus today, with speculation mounting that the Eurozone is on the brink of a fresh crisis with today’s Greek elections looming. After two previous rounds of voting have failed to find the parliamentary majority that is needed to vote in a new President, if today’s vote also fails, under Greek constitutional law, it will trigger a snap general election. This is seen as particularly worrying given the rising popularity of the anti-austerity Syriza party, which, though claiming to want to stay in the Eurozone, is setting itself up on a collision course with the rest of Europe over their commitment, or rather lack of, to reducing public debt. The results of the vote are expected this afternoon with the government’s only candidate, former EU commissioner Stavros Dimas, needing to capture 180 votes- twelve more than last week’s second round ballot- in order to receive the required mandate for appointment.

USD The US dollar still remains on the front foot against the euro, but has lost ground against most of its other major peers, despite stellar economic data last week. Not only was GDP revised up to 5% for the last quarter, but Christmas Eve saw the announcement that the number of unemployment claims in the economy also fell to its second-lowest weekly reading since early October. Still, with no fresh data due out today, the greenback is unlikely to lose much further ground in the short term.

CAD Again little to write about the Canadian dollar today, aside from to note that it has managed to strengthen slightly against the US dollar. However, with no data due out regarding the Canadian economy until the New Year, CAD is likely to be dependent on movements in the oil price to see any action.

UK news

  • FT. UK household incomes forecast to rise next year: Household incomes are likely to rise in 2015, escaping the weakness of the past four years, though living standards are unlikely to reach their pre-crisis peak until 2016 at the earliest.
  • FT. Bricks and mortar loses out in online rush: Retailers in the UK and US reported a rapid acceleration of the trend towards online purchases and away from bricks and mortar shopping during the festive season.
  • Daily Mail. Who said crime doesn’t pay? Counting prostitution and drugs in the GDP figure has seen the UK’s economy overtake France as fifth largest in the world.
  • Daily Mail. Immigration beats economy as number one worry for UK voters.