Morning Report: 9 February 2017

9th February 2017 By: Ranko Berich

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GBP.  It’s been a rather quiet 24 hours for G10 FX, and sterling has been no exception, shrugging off last night’s passage of the Article 50 Act through the House of Commons without much volatility. Yesterday’s speech by the Bank of England’s Jon Cunliffe also passed without incident, with Cunliffe steering clear of the sort of explicit hawkishness his colleague Kristin Forbes showed in a speech earlier in the week. The Royal Institute of Chartered Surveyors released its House Price Balance, which showed that a slightly bigger majority of surveyors than expected were reporting price increases. Today at 18:30 GMT BoE Governor Mark Carney will speak.

EUR.  The euro quickly clawed back the losses it saw vs USD in the morning yesterday, and EURUSD is currently trading roughly flat compared to the same time yesterday. As with sterling there was a paucity of data, although this morning Germany’s Trade Balance has been released at a slightly larger surplus than expected. Rumblings of the Greek debt crisis continued to reverberate through European politics, with Eurogroup head and Dutch Finance Minister Jeroen Dijsselbloem saying Dutch participation in the next round of bailouts would depend on IMF approval, something the Washington agency has so far indicated it is against, on account of Greece’s insolvency.

USD.  USD was also broadly flat yesterday, as several early Trump policies and nominations proceeded, including approval of the Dakota Access oil pipeline, but his travel ban on selected Muslim majority countries continued to languish in the legal system. The US data calendar will begin to pick up today, with the release of weekly Unemployment Claims at 13:30 GMT, followed by Wholesale Inventories at 15:00 and a speech from the Federal Open Market Committee’s Charles Evans at 18:10.

CAD.  The loonie strengthened yesterday, as crude oil prices increased off the back of the US Crude Oil Inventories report. Crude Oil inventories rose by an astounding 13.8 million barrels. However Gasoline inventories fell, causing the spot price of oil to increase. Housing Starts were slightly better than expected in January. Today at 13:30 the New House Price Index will be released, followed at 16:35by a speech from the Bank of Canada’s Lawrence Schembri.

UK news

UK house price growth edges up after December slowdown British house price growth became slightly more broad-based last month after slowing in December for the first time since just after June’s vote to leave the European Union, a monthly survey of property valuers showed on Thursday. The Royal Institution of Chartered Surveyors (RICS) said its house price balance rose to +25 in January after dipping to +23 in December, its first fall since July, bucking expectations in a Reuters poll for a further modest loss of pace. Central London – where the luxury market has been under pressure from concerns about Brexit and high purchase taxes – reported an eleventh consecutive monthly price fall. For the first time since September, surveyors did not expect prices in London to rise over the next 12 months.

MPs give green light for May to trigger Brexit process The battle for Brexit now moves to the Lords as the government warned peers not to thwart the smooth passage of the Article 50 bill triggering the process to leave the EU. MPs voted by 494 votes to 122 on Wednesday night to empower the government to start two years of talks with the EU on the terms of the divorce. The bill must now be approved by peers, who will begin debating it after they return from recess on February 20.