Newsletter – 18 January 2017

Morning Bulletin

Yesterday

  • Ahead of UK PM May’s press conference we had the release of key UK data yesterday morning. Inflation headlined and it gave sterling a brief lift:
    • UK CPI y/y 1.6% (1.4% Exp)
    • PPI Input m/m 1.8% (2.2% Exp)
    • RPI y/y 2.5% (2.3% Exp)
  • The main event yesterday was of course Theresa May’s press conference in which the UK PM laid out the most detailed plans yet as to what the government wants to achieve as part of the Brexit negotiations. The Key points included:
    • Britain will not seek single market membership.
    • UK parliament will vote on the final deal with EU before it comes into force.
    • Regarding our eventual exit the UK Government wants “phased process of implementation”, not “unlimited transitional status”.
    • No deal for Britain would be better than accepting a bad one.
    • UK wants a customs agreement with EU, but not one that prevents the UK striking free trade deals outside of the EU.
  • The outcome of PM May’s address saw Sterling rally aggressively in FX space, re-capturing those losses of Monday morning and then some. In the case of GBP/USD the rate even headed toward 2017 highs at 1.2389, up some 2.75% on the day.
  • Other Data Releases of note:
    • German ZEW Economic Sentiment 16.6 (18.9 Exp)
    • US Empire State Manufacturing Index 6.5 (8.1 Exp)
    • New Zealand Global Dairy Trade Price Index 0.6% (-3.9% Previously)

Overnight & This Morning

  • The Sterling rally did continue into yesterday evening, with the Pound briefly trading above 1.2400 versus the US Dollar; that 3% surge was the biggest daily gain since 2008.
  • Perhaps unsurprisingly however Sterling has cooled off a fraction this morning, with modest depreciation against most of its currency counterparts.
  • Speaking overnight, US Fed Member Williams reiterated his view that there is a good case for three rate hikes in the US this year.
Today

  • This morning once again will be very UK-centric with the release of 3 key pieces of UK employment data due at 9.30am. US Inflation data takes centre stage at 1.30pm before the afternoon ends with the Canadian Central Bank’s rate decision and press conference.

 

MAJOR CURRENCY PAIRS
Current at time of distribution

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1525 -0.54
GBP/USD 1.2336 -0.65
EUR/USD 1.0701 -0.11
AUD/USD 0.7558 -0.10

 

ECONOMIC CALENDAR
Current at time of distribution

Time (GMT) Region Data Release Forecast Previous
09.30 GBP Average Earnings Index 3m/y 2.6% 2.5%
09.30 GBP Claimant Count Change 4.6K 2.4K
09.30 GBP Unemployment Rate 4.8% 4.8%
10.00 EUR Final CPI y/y 1.1% 1.1%
13.30 USD CPI m/m 0.3% 0.2%
14.15 USD Capacity Utilization Rate 75.6% 75.0%
14.15 USD Industrial Production m/m 0.8% -0.4%
15.00 CAD BOC Overnight Rate 0.50% 0.50%
15.00 CAD BOC Rate Statement
16.15 CAD BOC Press Conference
20.00 USD US Fed Chair Yellen Speaks