Morning Report: 23 January 2017

23rd January 2017 By: Ranko Berich

GBP Sterling is soaring this morning against the USD, which is under heavy pressure. Friday’s fundamental data releases included a truly disappointing read for Retail Sales in December, which showed sales contracting by 1.9% month on month. Unseasonably warm weather in December may have contributed to a fall in clothing purchases, but the figures nonetheless showed some broad based weakness. Politics will lead the agenda for sterling for the first half of this week’s with the Supreme Court ruling on the Government’s ability to initiate the UK’s departure from the EU without an act of Parliament expected on Tuesday. Later in the week, the first release of Gross Domestic Product growth in Q4 will be released on Thursday.

EUR The euro also finds itself a benefactor of USD weakness this morning, but is on the back foot against sterling. It will be a slow start to the week data wise today, with only Consumer confidence scheduled for release at 15:00 GMT, and a speech from European Central Bank President Mario Draghi at 11:30. Survey data will dominate Tuesday and Wednesday, with the release of Purchasing Managers Indices and the German IFO Business Climate.

USD The US dollar is under heavy pressure this morning, after President Donald Trump has failed to offer any detail whatsoever on economy (and inflation) stimulating fiscal measures of the sort that have been widely speculated over by markets since his election. Political policy will nonetheless be the main focus for USD into the start of the week, as the new administration sets out its agenda for the first 100 days of office. No data will be released today, but later in the week Purchasing Managers Indices for the services and manufacturing industries will be out on Tuesday and Thursday, and the first reading of Gross Domestic Product Growth in Q4 will be out on Friday.

CAD The loonie weakness seen in the wake of last week’s Bank of Canada meeting is being serious challenged this morning, as the Canadian dollar goes on the offensive amid broad USD weakness. Friday’s Canadian data was hardly inspiring: the Consumer Price Index contracted 0.2%, while retail sales rose by 0.2%, less than expected. This week will be slow for Canadian data: Wholesale Sales will be released today at 13:30 GMT

UK News

  • May’s industrial strategy to back ‘new, active role’ for government – Financial Times. Champions to be named in growth sectors with life sciences and cars among targets. Theresa May will set out her vision for Britain’s industrial future on Monday, promising to boost “world-leading” sectors while “closing the gap” between the most productive industries and places, and the rest. At the launch of the government’s industrial strategy discussion document in north-west England, the prime minister will promise a “new, active role” for government that “ensures [that] more people in all corners of the country share in the benefits of [business] success”.
  • UK seeks interventionist approach to drive post-Brexit industrial revival – Reuters. Britain will on Monday outline a new, interventionist approach to balancing its heavily services-based economy for the post-Brexit era, seeking to reinvigorate industrial production and stimulate investment in technology and R&D. Unveiling her long-awaited ‘Modern Industrial Strategy’, Prime Minister Theresa May will demand closer collaboration within key industries in exchange for government support on regulation, trade and research.