Newsletter – 14th December 2018

Morning Bulletin

Yesterday

  • The ECB’s monetary policy meeting was the focus of yesterdays trading. As expected the central bank kept their main interest rate on hold at 0.00% and broadly kept their policy unchanged. They did however finally decide to end their unprecedented and massive bond buying program which they had been signalling they would do for some time.
  • The ECB did also cut growth forecasts and tweak inflation projections:
    • Eurozone Growth in 2019 was trimmed to 1.7%, from 1.8% prior.
    • Eurozone Inflation in 2019 lowered to 1.6%, from 1.7% prior.
  • In his press conference, ECB President Mario Draghi said that the risks to the Eurozone’s economic growth outlook remained ‘broadly balance’ but were tilted to the downside.
  • According to the FT, the EU 27 leaders are preparing to tweak some of the legal clarifications around the Ireland backstop solution in order to help UK PM Theresa May win over those critical MP’s in the commons. The EU have however warned they will not consider renegotiating the 565 page Brexit treaty.
  • UK PM Theresa May confirmed again yesterday that she would stand down before the next general election but wouldn’t be drawn on an exact date. Mrs May added that she did not expect an immediate breakthrough on talks with the EU but hoped to start work as quickly as possible on further reassurances.
  • A spokesman for the PM said a vote on the Brexit Deal won’t take place before Christmas but would happen as soon as possible in January, but no later than the 21st.
  • Tweeting yesterday US President Donald Trump tried to suggest that the new trade deal between Mexico, Canada and the US would effectively see Mexico paying for his prized Border Wall. Trump said the money that the US would save in the new deal versus the old NAFTA would mean ‘Mexico is paying for the wall’.
  • There was very little movement in FX rates over the course of yesterday’s trading. Sterling pairs in particular traded pretty flat on the day, perhaps unsurprising after a tumultuous start to the week.
Overnight

  • Some reports this morning suggesting that Theresa May was left humiliated by EU Leaders following her latest dash to Brussels as they have rejected her pleas for concessions in order to get a deal through the house of commons.
  • This would tally with comments from EU’s Tusk and German Chancellor Merkel who both said the EU will not renegotiate the Irish backstop.
  • Japan Flash Manufacturing PMI 52.4 (52.3 Exp)
  • China Industrial Production y/y 5.4% (5.9% Exp)
  • China Retail Sales y/y 8.1% (8.8% Exp)
Today
  • Raft of US data due this afternoon, with Retail Sales the headline print at 1.30pm.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1140 -0.03
GBP/USD 1.2586 -0.57
EUR/USD 1.1297 -0.52
AUD/USD 0.7165 -0.85

 

09.00 EUR Eurozone Flash Manufacturing PMI 51.9 51.8
09.00 EUR Eurozone Flash Services PMI 53.4 53.4
13.30 USD Retail Sales m/m 0.1% 0.8%
14.15 USD Capacity Utlisation Rate 78.6% 78.4%
14.15 USD Industrial Production m/m 0.3% 0.1%
14.45 USD Flash Manufacturing PMI 55.1 55.3
14.45 USD Flash Services PMI 54.7 54.7
15.00 USD Business Inventories m/m 0.6% 0.3%