Sterling fluctuated in a relatively tight range during yesterday’s session as markets continued to toy with the idea of a rate cut by the Bank of England at the end of the month. Fixed income markets trimmed pricing of a 25 basis point cut to measure its likelihood just under 50%. It is unlikely this move can be attributed to Boris Johnson’s statement that the UK may not strike a deal with the EU by the end of the year. Instead, the move looked more like a mild retracement by markets following Monday’s dramatic repricing of expectations. Today, the data will be key yet again with the release of December’s CPI inflation report at 09:30 GMT. Inflation is expected to have ended 2019 at 1.5% YoY with the core measure stabilising at 1.7% YoY.


The euro was once again out of the spotlight yesterday and quickly rallied after a brief dip in the evening after details emerged of the US-China trade truce. EU trade chief Phil Hogan met with senior US and Japanese officials in Washington and said that progress had been made on the issue of industrial subsidies. Hogan’s trip to Washington this week comes at a delicate time for trade relations between the US and EU, after threats of tariffs by the Trump administration. His trip will continue to be closely watched, especially for any signs that the Trump administration is likely to look to escalate tensions with the EU after the seeming truce that has been reached with China. The eurozone’s trade balance will be released alongside industrial production figures at 10:00 GMT this morning.


People familiar with the Trump administration announced yesterday that the US are unlikely to reduce the pre-existing tariffs levied on China, until after the November election subject to the conditionalities of the phase one deal being met. The dollar is trading slightly lower against most G10 currencies this morning on the news. Speaking of, the Trump administration plans to restrict the news media’s ability to prepare advance stories on economic data releases via media lockups. The move could cause a logjam in the markets accessibility to key parts of the data releases and disrupt current AI practices. The move is likely to increase volatility in financial markets as reports are digested at a slower rate by participants. An announcement on this matter is expected this week but could upend practices that have been in place by key financial media sources such as Bloomberg and Thomson Reuters. Elsewhere, US money markets are expected to continue seeing liquidity provisions from the New York Federal Reserve next month, albeit at a reduced rate of $30bn. Today, the key data point coming from the US is the PPI Inflation report at 13:30 GMT.


The loonie has held strong considering oil markets continue to retrace the spike seen following the missile attack in Iraq. Data remains light on the ground today, meaning attention will remain focused on global drivers, especially risk appetite in the wake of today’s expected signing of a “phase one” trade deal between the US and China.



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