Morning Report: 25 January 2017

25th January 2017 By: Ranko Berich

GBP Sterling has completely shrugged off yesterday’s legal and political developments, and is currently trading at new highs against USD and the euro. The Supreme Court ruled that the Government may not use prerogative powers to begin the formal process of leaving the European Union, forcing Theresa May to seek an act of Parliament. The Prime Minister is now expected to attempt to fast track such a bill, possibly relying on support from opposition MPs, who, in the case of the Labour Party, will be given orders by party leader Jeremy Corbyn to vote for the bill. Today at 11:00 GMT the latest Industrial Order Expectations index will be released by the Confederation of British Industry.

EUR The euro drifted slightly lower yesterday, despite a solid crop of Purchasing Managers Indices. The survey based indices of economic output showed a decent level of output increases across France, Germany, and the eurozone as a whole, with good overall performance on the employment sub-indices. Germany’s Manufacturing Index stood out with a particularly high reading, placing attention on today’s important German IFO Business Climate Survey release at 09:00 GMT.

USD After a shaky start to the week USD has recouped some of its losses against major partners overnight, ahead of a potentially dramatic day of announcements from the Trump Administration today. President Trump yesterday tweeted that a “big day” was planned on “NATIONAL SECURITY” [sic] today, going on to mention “the wall”. The prospect of Trump following through on some of his more outlandish campaign promises may indicate that he is serious about his core message of economic protectionism, a prospect that is likely to have an impact on the dollar. Existing Home Sales fell slightly in December, while the Richmond Manufacturing Index rose, indicating improving confidence among the surveyed manufacturers.

CAD The loonie continues to strengthen this morning after President Donald Trump signed executive orders yesterday pushing forward the Keystone XL and Dakota Access pipelines. The prospect of greatly improved market access for Canadian oil producers remains a positive for the loonie, although with crude oil prices themselves trading sideways further gains are not assured. Today at 15:30 GMT North American Crude Oil Inventories will be released in the United States.

UK News

  • Theresa May to fast-track Brexit bill following court defeat – Financial Times. Downing St hopes to secure parliamentary approval to trigger Article 50 by mid-March. Theresa May will this week table fast-track legislation to keep her Brexit plan on track after suffering a defeat in the UK Supreme Court which ruled she could not trigger an exit from the EU without the consent of parliament. The British prime minister is expected to publish a concise bill on Thursday that would give her full authority to invoke Article 50, the EU treaty’s divorce clause, at her discretion. She will try to push it through both the House of Commons and House of Lords by the middle of March, allowing her to stick to her original timetable and trigger Brexit by the end of that month.
  • UK public finances data suggest Hammond likely to hit deficit target – Reuters. Philip Hammond, Britain’s Chancellor of the Exchequer attends the World Economic Forum (WEF) annual meeting in Davos, Switzerland January 20, 2017. Britain cut its budget deficit by slightly less than expected last month but a better than previously thought performance in November could help Chancellor Philip Hammond to hit his target for the current financial year. Official figures on Tuesday showed public borrowing in December alone fell by 5 percent to 6.9 billion pounds, higher than a median forecast of 6.7 billion pounds in a Reuters poll of economists.