Newsletter – 12 January 2017

Morning Bulletin

Yesterday

• Despite the ongoing concerns over Brexit the UK economy continues to impress, yesterday it was Manufacturing and Industrial Production numbers which smashed expectations. The Manufacturing Production print of 1.3% (0.6% Exp) was the highest since June 2016, whilst Industrial Production saw its highest reading since September 2012 at 2.1% (0.8% Exp).
• Despite these blowout numbers the Pound was still subdued and in fact started approaching post-EU referendum lows against the US Dollar & Euro. The reason for this slump was the release of UK Goods Trade Balance showing the UK’s trade deficit widened to -12.2Bn (-11.2Bn) in November, and despite an encouraging pick up in Exports there was also a surge in imports.
• The event that garnered most attention yesterday was of course the press conference held by US President-Elect Trump. Ahead of the conference the US Dollar was rallying in FX space as many expected Trump to use this opportunity to spell out further details on his economic plans when he takes office. Instead Trump decided to have a pop at some members of the media, pharma companies and the US intelligence Aagencies. As a result we saw the US Dollar retreat.
• Testifying before a Parliament Treasury Select Committee yesterday afternoon, BOE Governor Carney said he felt the continent faced greater risk of financial instability due to the Brexit process than the UK did, however he did warn that Brexit did have the potential to amplify risks faced by Britain.

• Japanese Bank Lending y/y 2.6% (2.4% Exp)
• Japanese Current Account 1.80T (1.48T Exp)
• French Final CPI m/m 0.3% as expected.

• There are a number of data releases due today, but only one of which would be deemed high impact and that comes in the form of US Unemployment Claims due at 1.30pm. The release of ECB minutes from their most recent monetary policy meeting could also impact the Euro.