Morning Report: 10 October 2017

10th October 2017 By: Ranko Berich

GBP Sterling posted a small rally yesterday, giving it some breathing room after last week’s losses, and ahead of this morning’s top tier data releases. Political back and forth over Brexit, with little new material information emerging as Theresa May gave her umpteenth speech on the topic, saying the ball was now in the EU’s court, only to have a European Commission spokesperson issue a rebuke that essentially said “no it isn’t, it’s on your side”. This morning’s data will include Manufacturing and Industrial Output, as well as Construction Output and the Goods Trade Balance. Later in the morning at 11:00 BST, the Office for Budgetary Responsibility will release its latest government budget projections, and is expected to provide yet another blow to May’s Government by reducing estimates of income.

EUR The euro pared back recent gains versus sterling yesterday, but advanced against USD. The European Central Bank’s Sabine Lautenschlager made some comments on the end of Quantitative Easing, saying the ECB should taper its purchases at the start of 2018 and follow a set schedule. Aside from Sabine’s comments the day was uneventful, with Sentix Investor Confidence soaring to its highest level in years. This morning’s data has included A larger than expected German Trade Balance figure, and weaker than expected French Industrial Production, which contracted 0.3% after a 0.8% expansion last month.

USD Yesterday was Colombus Day in the US, and the greenback weakened to GBP and EUR while no headline data was released. The week’s calendar will be off to a slow start today, with only a speech from the Federal Open Market Committee’s Neel Kashkari at 15:00BST, and IBD Economic Optimism released at the same time.

CAD Canadians enjoyed the Thanksgiving holiday yesterday, but the loonie did manage to firm up noticeably against USD. Today at 13:15 and 13:30 BST respectively Housing Starts and Building Permits will be released, giving observers a good look at volatile but interesting monthly construction sector data. The Bank of Canada’s Carolyn Wilkins will speak in Washington DC on Macro-Prudential policy at 19:00.

UK news

  • FT: Theresa May sets out trade plans for a no-deal Brexit. PM says Florence speech set new dynamic but white paper prepares for vacuum. Theresa May has set out detailed plans for the first time on how Britain would try to keep trade flowing if it fell out of the EU without a deal, as the prime minister prepared for a high-stakes game of brinkmanship with Brussels. She told MPs that her conciliatory speech in Florence last month had introduced “a new dynamic” into Brexit talks but added that the government had a duty to prepare for them failing. The move will be seen in Brussels as a welcome outbreak of realism in London, but it crosses Brexit “red lines” set out by foreign secretary Boris Johnson and angered some Conservative Eurosceptics.
  • BBC: UK still pulling in the tourists. One thing booming in the UK at the moment is tourism with record numbers of overseas visitors flocking over here to see the sights. Steve Ridgeway, chairman of VisitBritain, told the Today programme: “It’s one of the few pluses you can have at this point and we may hit the magic 40 million number this year. “Staycations are also on the rise – that has been going on a while and can be traced back to the global financial crisis. It is also more expensive for UK residents to go overseas.” With freedom of movement laws set to change after Brexit, Mr Ridgeway added: “A total of 70% of tourists to the UK come from Europe and we want to make sure people are welcome here and there are still reasons to come to the UK.”