Morning Report: 29 January 2018

29th January 2018 By: Ranko Berich

GBP Sterling traded flat against USD on Friday and lost ground against the euro, despite Friday’s data including a better than expected print for UK Gross Domestic Product, at 0.5% for Q4 last year against an 0.4% forecast reading. The weekend’s political news included increased dissent from the House of Lords over the EU withdrawal bill, which will be debated this week. Aside from ongoing political developments, Bank of England Governor Mark Carney will testify to the House of Lords Economic Affairs Committee on Tuesday, and Manufacturing and Construction Purchasing Managers Indices will be released on Thursday and Friday.

EUR Friday was a quiet end to a spectacular week for the euro, with the single currency trading virtually unchanged against USD compared to Friday morning, after advancing sharply earlier in the week. A large number of national data releases will fill this week’s data calendar, including French, Spanish, and Eurozone Gross Domestic Product on Tuesday, and French, Spanish, and Eurozone Consumer Price Index inflation on Wednesday.

USD The dollar is trading with a glimmer of hope this morning, and has rallied slightly, after being utterly routed against a broad range of currencies last week. The week’s calendar is filled with highly relevant USD entries, beginning with today’s Personal Consumption Expenditures Price Index at 13:30 GMT. President Trump will give the State of the Union speech on Wednesday, where he is expected to highlight the strong economic performance of the US since his election. Wednesday also sees Janet Yellen’s last Federal Reserve Open Market Committee meeting as chair, with Jerome Powell set to take over, though with no interest rate change expected, and no scheduled post-announcement press conference, little movement is expected for the USD. On Friday, the Non-Farm Payrolls report will be released.

CAD The loonie has pared Friday’s gains versus USD overnight, after Friday’s data included a larger than expected monthly drop in the Consumer Price Index. For now, no news is good news from NAFTA negotiations, which saw some fairly positive headlines yesterday when US lawmakers attending talks in Montreal expressed optimism about the chances of reaching a deal. This week’s major data release for the loonie will be Wednesday’s monthly Gross Domestic Product.

UK news

  • Reuters: Challenged on all fronts, May faces pressure over Brexit law. Prime Minister Theresa May came under further pressure over her Brexit blueprint on Monday, with members of the upper house of parliament saying there were “fundamental flaws” in a law crucial to the departure
  • Telegraph: Why Jeremy Corbyn’s 2017 general election ‘youthquake’ was a ‘myth’. Labour’s better than expected 2017 general election was not the result of a “youthquake”, new research has shown. An analysis of voter turnout at last year’s poll has revealed that Jeremy Corbyn did not persuade young people who previously failed to vote to back him as was widely believed.