Sterling sat under pressure yesterday as the latest polls signalled an increase in support for the Labour party. Sterling is trading heavy under the pressure of a Labour win, but notably, the pound hasn’t reversed yesterday’s losses despite Jeremy Corbyn’s interview with the BBC’s political correspondent Andrew Neil which has been regarded as “political suicide” in the papers. The data calendar is once again barren for the pound. GBPUSD continues to float within the recent 1.7% range, while its price action inside said band has been driven by political noise and polling results.


EURUSD volatility has dropped off a cliff this week with the single currency trading within a 0.26% intraday range. Despite little economic data, the ECB Chief Economist’s speech in Brussels at 09:30 GMT may breathe some life into euro trading. Philip Lane may join other key ECB speakers and begin singing from the same hymn sheet. The ECB has begun to pressure on European fiscal plans of late, emphasising the need for economies running a budget surplus to increase spending on investment projects. Recent data suggests the effectiveness of further monetary policy easing has been limited. Although the signs are premature, and the transmission of monetary easing tends to have a longer lag, it suggests the ECB’s marginal impact on the real economy is diminishing.


Global markets are reminded yet again not to forget about the US-China trade war and the supposedly incoming phase one deal yesterday as President Donald Trump stated “we’re in the final throes of a very important deal” last night on Fox News. Markets are all too familiar with the rapidly shifting trade sentiment and have become relatively numb to the headlines. Uncertainty still exists over the depth of the phase one deal and whether the delay in its approval means the deal may be further reaching than initially thought. The dollar is marginally higher on the news this morning ahead of key data this afternoon. The second reading of Q3 GDP is released at 13:30 GMT, with expectations sitting at no change from the 1.9% first reading, while October’s PCE inflation measure is released at 15:00 GMT. Both headline and core inflation are expected to pick up marginally. The Fed’s economic measures are also released this evening in the form of the economic beige book.


The loonie benefitted from positive trade headlines yesterday as oil markets rallied and risk sentiment improved. USDCAD fell 0.2% over the course of the day while WTI rallied 0.5%. The loonie continues to trade on the front this morning as risk sentiment spills over after Trump’s Fox interview.



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