Newsletter – 19th October 2018

Morning Bulletin

Yesterday

  • UK Retail Sales tanked in September following a large drop in food sales. Expecting a fall of -0.4% the actual print was twice as bad at -0.8% m/m. The Pound did slip a fraction in FX space following the print but ultimately Brexit-related matters continue to dominate movements in the Pound.
  • In fact the Pound was largely on the back-foot all day following the morning’s revelations that the Brexit transitional period could be extended. Whilst Government sources suggested the extension would be for just a few months longer (Currently extension to run to Dec 2020) that could prove completely unpalatable to the Brexit-backing MP’s within the Government and to those voters who want out of the EU pronto.
  • Having been trading around 1.3115 at the start of the morning, sterling quickly slipped below the 1.3100 handle before eventually closing the day down at 1.3050 against the US Dollar.
  • Losses against the Euro were however limited as the EU and Italy remain at loggerheads over Italy’s proposed expansion to its 2019 budget, with the European Commission set to send a letter to Rome asking for clarification on the proposed budget.
  • Whilst GBP/EUR traded steadily, closing the day at 1.1378, the Euro slipped to 1.1469 against the US Dollar, down 0.27% on the day.
  • US Philly Fed Manufacturing Index 22.2 (19.7 Exp)
  • US Unemployment Claims 210K (211K Exp)
Overnight

  • The EU Commission letter to Italy warned Rome that their 2019 budget draft was in particularly serious breach of EU budget rules, with planned spending too high leading to a rise in the structural deficit and a public debt that would not fall into line with EU rules.
  • Japan National Core CPI y/y 1.0% as expected
  • China GDP q/y 6.5% (6.6% Exp)
  • China Industrial Production y/y 5.8% (6.0% Exp)
  • Economists at Goldman Sachs believe the US Fed will hike rates 5 more times through to the end of 2019, two more than the current market consensus.
Today
  • Canadian Inflation and Retail Sales data will be in focus today, with both figures due at 1.30pm.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1373 +0.07
GBP/USD 1.3013 -0.03
EUR/USD 1.1440 -0.10
AUD/USD 0.7106 +0.11

 

Time (GMT) Region Data Release Forecast Previous
09.30 GBP Public Net Sector Borrowing 4.6Bn 5.9Bn
13.30 CAD CPI m/m 0.1% -0.1%
13.30 CAD Core Retail Sales m/m 0.1% 0.9%
15.00 USD Existing Home Sales 5.29M 5.34M
17.00 USD Fed Member Bostic Speaks
17.10 GBP BOE Gov Carney Speaks