Morning Report: 30 August 2017

30th August 2017 By: Ranko Berich

GBP Sterling reached a fresh high for the month against USD yesterday, before reversing direction and closing the day lower, extending its losses this morning. Political back and forth continued between European and UK politicians over the UK Government’s release of position papers for Brexit negotiations last week. European Commission President Jean-Claude Juncker said that none of the position papers published last week were satisfactory. This was a predictable move given the Commission’s position that the subject matter of the papers – the future relationship of the EU and Britain – cannot be negotiated until the terms of “divorce” are agreed. Today at 09:30 BST, Bank of England Money and Credit data will be released, including headline M4 Money Supply as well as Mortgage Approvals.

EUR EURUSD reached fresh highs yet again yesterday, although the euphoria was short lived and the single currency finally fell back against the greenback during the afternoon. This morning’s biggest releases for the euro will be German Consumer Price data, which will be released on a regional basis throughout the morning, culminating in the nation wide release at 13:00 BST. The Spanish Consumer Price Index has already been released, and showed an acceleration in inflation to 1.6% year on year, slightly lower than expected.

USD After taking a battering yesterday morning the US dollar managed to marshal some modicum of resistance and launch a small rally, which continues this morning. No truly new information has emerged from the week’s key themes, which remain North Korea, ongoing flooding in Texas, and the prospect of a bruising debt ceiling debate, although this may well change at any time. Interestingly, Consumer Confidence figures released by the Conference Board yesterday showed an overall increase in optimism among those surveyed. Today at 13:15 BST ADP will release its estimate of Non-Farm Payrolls growth, and at 13:30 BST revised Gross Domestic Product growth data will be released.

CAD The loonie followed a similar pattern to other currencies against USD yesterday, at first strengthening before reversing in the afternoon. Price Indices for Raw Materials and Industrial Products both contracted sharply in July, as metal ores and motor vehicles led the declines. Today at 13:30 BST, Current Account data will be released.

UK news

  • FT: Texas faces more flooding as Harvey refuses to let up Trump says there has probably ‘never been anything so expensive in our country’s history’. Texas residents faced more flooding triggered by tropical storm Harvey as water levels surged in reservoirs in west Houston and a levee south of the city was breached, compounding the human and physical cost of one of the worst US disasters for decades. Harvey, which started as a hurricane and then became a tropical storm, is expected to dump yet more rain on eastern Texas and western Louisiana, having already set a mainland US record for a tropical cyclone by releasing almost 52 inches of rainfall in one area. Residents were urged on social media to flee by authorities in Brazoria County, south of Houston, after a levee was breached, while authorities reported that water was spilling over at the Addicks Reservoir, in the west of the city. Houston imposed an overnight curfew beginning on Tuesday night for an indefinite period amid incidents of looting, armed robberies and people impersonating police officers, city officials said.
  • Reuters: Optimism wanes at UK services companies, labour shortages feared Optimism across Britain’s services sector fell during the three months to August, and companies felt the pinch from rising costs even though new business largely held up, an industry survey showed on Tuesday. The Confederation of British Industry’s quarterly report on the services sector, which produces the vast bulk of economic output in Britain, showed confidence waned in both consumer- and business-facing services firms. Official data last week showed Britain’s economy suffered weakness on all fronts in the three months to June, with shoppers pinched by the pound’s tumble, exports failing to fill the gap, and business investment frozen by Brexit uncertainty.