Morning Report: 30 November 2015

30th November 2015 By: Ranko Berich

GBP Sterling has started today trading at its weakest level versus USD since April, ahead of a week of crucial releases. This morning at 09:30 GMT, the Bank of England will release its latest Money Supply data. In addition to headline money supply, monthly Mortgage Approvals and lending to the private sector will be worth examining to judge the effects of the Bank’s continued low interest rate policies. Tomorrow, the BoE’s Financial Policy Committee will release its Financial Stability report. The report normally has less effect than events pertaining to monetary policy, but can nonetheless move markets if the FPC’s outlook for overall risk has changed. Bank of England Governor Mark Carney will present the report in a press conference at 09:00 GMT, and Construction and Services Purchasing Managers’ Indices will be released on Wednesday and Thursday.

EUR The last couple of trading sessions have seen the euro stabilise somewhat, after weeks of relentless losses. This reprieve may be temporary however, considering the feverish speculation that is surrounding this week’s ECB rate announcement and Press Conference on Thursday. Markets are aggressively pricing in further monetary easing from the ECB, after a report last week suggested the Bank would look to implement a two tier deposit rate in order to further discourage banks from parking their excess cash. Today’s biggest euro release will be German Consumer Price Index inflation, which will be released on a regional basis throughout the morning, culminating in Germany wide CPI at 13:00 GMT.

USD USD is well and truly on a bull run, trading at or near many month highs against much of the G10 and near decade or all-time highs against many emerging market or commodity currencies. Much of the appreciation has been underpinned by two assumptions: firstly, that the Federal Reserve will raise interest rates in the near future, and secondly, that crude oil prices will remain low. Both of these assumptions will be tested this week, with a number of important Fed speakers on the calendar and the all-important Non-Farm Payrolls report due for release on Friday. Speeches from the Fed’s Evans, Brainard and Lockhart on Tuesday and Wednesday will be worth watching, especially the former two. Evans and Brainard have been notable dissenters from the Fed’s prevailing desire to hike interest rates this year. If they acknowledge their views are in the minority this week it will all but confirm the Fed’s course in December. Fed Chair Janet Yellen will speak on Wednesday and testify to lawmakers on Thursday, but is likely to be extremely guarded this close to the Fed’s December meeting. Finally, the Non-Farm payrolls report will be released on Friday.

CAD This will also be a big week for CAD, which has been consistently weakening since late Thursday evening. The Bank of Canada will announce its latest Overnight Rate, together with a Rate Statement, on Wednesday afternoon. The BoC has steered clear of giving much in the way of forward guidance this year, meaning that a rate cut can’t be ruled out from Wednesday’s meeting. Friday’s OPEC meeting will be a crucial event for crude oil prices, and, by extension, the Canadian dollar. OPEC member countries have been relentlessly increasing production this year, and after Saudi Arabian sources recently said they were willing to work with other producers to stabilise prices, Friday’s meeting will be subject to intense scrutiny from markets and media.

UK News

  • Reuters. UK October consumer credit rises strongly: British consumer credit continued to grow during October at rates not seen since 2006, while mortgage approvals edged up, Bank of England data showed on Monday.
  • Reuters. BoE’s Vlieghe says ‘relaxed’ about waiting to hike rates: Bank of England policymaker Gertjan Vlieghe said in a newspaper interview publishedon Saturday he was relaxed about waiting longer before deciding to raise interest rates from record low levels.