Morning Report: 29 November 2016

29th November 2016 By: Ranko Berich

GBP Sterling weakened against USD and EUR yesterday as global fixed income markets took a pause from the massive sell off last week, but is recovering this morning, with newspapers reporting that the government is facing a fresh legal challenge about its ability to leave the European Economic Area. Official government sources had been quick to aggressively assert that Britain would leave the EEA as a matter of course, contributing to sterling’s declines yesterday. Bank of England Money Supply data has given sterling a further boost this morning, with Mortgage Approvals rising to 68,000 in September.

EUR The euro saw a small rally yesterday morning evaporate throughout the day, and is trading down since open against both USD and GBP this morning, despite a strong crop of fundamental data. German Import Prices rose 0.9% in October, as the index continued its recovery after being in 2.6% year on year decline as recently in August. German Consumer Price Index data will be released on a regional basis throughout the morning, culminating in country wide CPI at 13:00 GMT. The Spanish Consumer Price Index rose 0.7 year on year in November, according to this morning’s release, while French Consumer Spending recovered from last month’s declines with a 0.9% increase.

USD USD strength is again a theme this morning, after the greenback saw mixed performance yesterday. The US data calendar starts in earnest today, with the release of Gross Domestic Product growth for the third quarter set for release at 13:30 GMT, accompanied by GDP Price Index data. The Case Shiller House Price Index will be released at 14:00, followed by CB Consumer Confidence data at 15:00. Federal Open Market Committee members Dudley and Powell will speak at 14:15 and 17:40 respectively.

CAD The loonie strengthened yesterday as crude oil prices recovered from the weekend’s OPEC related headlines. Attention remains firmly focussed on this week’s OPEC meeting, but Bank of Canada Governor Stephen Poloz did make some dovish statements overnight in a speech. Poloz acknowledged that “pockets of weakness” had been seen in recent Canadian data, indicating that Q4 growth could be “a little softer” than Q3. Today at 13:30 GMT Current Account data for the third quarter will be released.

UK News

  • FT. Pound enjoys respite as Brexit risk looms. Political risk set to overshadow performance of the currency. A surging US dollar on the foreign exchange market has encountered one obstacle — in the form of pound sterling. The Bank of England’s effective exchange rate index, which measures the value of the pound on a trade-weighted basis, is 4.8 per cent higher since the start of November. This comes after the index slumped to an all-time low in October in the wake of the country’s Brexit vote.
  • Reuters. UK retail sales grow at fastest rate in over a year in November – CBI. British retail sales grew at their fastest rate in more than a year earlier this month as colder weather continued to boost clothing sales, a survey by the Confederation of British Industry showed on Friday. The CBI distributive trades survey’s retail sales balance rose to +26 in November from October’s reading of +21, its highest since September 2015 and far stronger than economists’ expectations of a fall to +12 in a Reuters poll.