Newsletter – 16th October 2018

Morning Bulletin

Yesterday

  • Having gapped lower on the open of trading yesterday morning, following those reports that Brexit negotiations had once again broken down, sterling did consolidate in FX space before recovering over the course of the day.
  • Whilst small gains were made against the Euro, the Pound surged against the US Dollar. Having opened down at 1.3083 the Pound managed to close the day back up around 1.3150.
  • The Irish Border issue continues to be the main stumbling block to securing a Brexit divorce deal. Speaking yesterday afternoon UK PM Theresa May said it was frustrating the two sides could not agree on a means to guaranteeing no hard border in Northern Ireland post-Brexit, but added the issue would not derail the chances of a deal being struck and that the UK would not be stuck in a permanent limbo tied to EU customs rules.
  • Also speaking yesterday afternoon, European Council President Donald Tusk warned the remaining 27 EU member States to be ready for a no-deal Brexit as the scenario becomes ever more likely following stalled talks over the weekend. However Mr Tusk still believes every effort must be made to avoid such a scenario and said ‘Let us not give up’.
  • US Economic data dissapointed yesterday afternoon with Retail Sales in September up just +0.1% month-on-month, that was comfortably short of the +0.7% rise expected. The shortfall was due to the biggest drop in spending at restaurants and bars in nearly two years.
  • US Empire State Manufacturing Index 21.1 (20.4 Exp)
  • US Business Inventories m/m 0.5% as expected
  • Canadian companies were optimistic even before the new trade pact with the United States was updated and agreed. According to the Bank of Canada poll, which was conducted between August and September, overall business sentiment is running near record levels.
Overnight

  • China CPI y/y 2.5% as expected
  • New Zealand CPI q/q 0.9% (0.7% Exp)
  • German Import Prices m/m 0.0% (0.1% Exp)
  • According to a Reuters poll of leading economists, despite a cocktail of political (Italy/Brexit) and trade concerns (US Tariffs) the ECB will end it’s bond-buying programme within the next three months with very little chance of an extension.
Today
  • Plenty of economic data to digest over the course of the day.
  • UK Average Earnings will be the day’s key print due at 9.30am this morning.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1373 +0.13
GBP/USD 1.3184 +0.25
EUR/USD 1.1591 +0.11
AUD/USD 0.7124 -0.09

 

Time (GMT) Region Data Release Forecast Previous
09.30 GBP Average Earnings Index 3m/y 2.6% 2.6%
09.30 GBP Unemployment Rate 4.0% 4.0%
09.30 GBP Claimant Count Change 4.5K 8.7K
10.00 EUR Trade Balance 15.0Bn 12.8Bn
10.00 EUR German ZEW Economic Sentiment -12.3 -10.6
11.00 EUR Italian Trade Balance 4.34Bn 5.68Bn
14.15 GBP BOE Member Cunliffe Speaks
14.15 USD Capacity Utilisation Rate 78.2% 78.1%
14.15 USD Industrial Production m/m 0.2% 0.4%
15.00 USD JOLTS Job Openings 6.90M 6.94M