Newsletter – 17 January 2017

Morning Bulletin

Yesterday

  • On a Monday that was made up of very little economic data, sterling struggled against its peers with many news outlets continuing to speculate on the content of PM Theresa May’s scheduled speech on Brexit.
  • GBP/EUR opened at 1.1440 before dropping down to a low of 1.1296 as traders reacted to the news over the weekend that PM May would set her priorities on Tuesday with remaining in the single market unlikely to be one of them.
  • After the initial reaction, sterling recovered to close nearer to 1.1367.
  • GBP/USD has recovered for the most part after opening nearly 200 points lower yesterday than it’s Friday closing rate.
  • We opened at 1.20 before gradually gaining some ground back to close at 1.2044.
Overnight
  • Industrial production in Japan for November came in at 4.6% y/y as expected.
  • Japanese Economist Min Ishihara said that uncertainty in the global economy is highlighted by recent market movement.
Today
  • Today is all about Theresa May’s speech at 11.45pm. PM May is expected to reveal 12 negotiating objectives.
  • It is expected that she will reject any partial membership of the EU once the UK leaves.
  • The PM will tell other European countries that the UK wants to trade with them as freely as possible but will not be “half-in, half-out” of the EU. (BBC News)
  • Traders will be watching this speech closely and so far the government has revealed few details about what it wants to achieve from the Brexit talks so there is the potential for volatility in the markets around this time.
  • In terms of data, we have UK CPI y/y 9.30am followed by German ZEW Sentiment at 10am from the Eurozone.
  • After May’s speech at 11.45am, we have Empire State Manufacturing Index data at 1.30pm before US Treasury Secretary Jack Lew is interviewed on CNBC at 3pm.

 

MAJOR CURRENCY PAIRS
Current at time of distribution

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1366 -0.01%
GBP/USD 1.2120 +0.63%
EUR/USD 1.0662 +0.64%
AUD/USD 0.7532 +0.76%

 

ECONOMIC CALENDAR
Current at time of distribution
Time (GMT) Region Data Release Forecast Previous
09.30 GBP CPI y/y 1.4% 1.2%
09.30 GBP PPI Input m/m 2.2% -1.1%
09.30 GBP RPI y/y 2.3% 2.2%
10.00 EUR German ZEW Economic Sentiment 18.9 13.8
11.45 GBP PM Theresa May Speaks
13.30 USD Empire State Manufacturing Index 8.1 9.0
15.00 USD Treasury Sec Lew Speaks
TBC NZD GDT Price Index -3.9%