Newsletter – 21st November 2018

Morning Bulletin

Yesterday

  • The commodity currencies fared the worst in FX markets yesterday as the price of oil tumbled, with US Crude Oil falling by 6% to a 1-year low. Those currencies include the Aussie and Canadian Dollars, whom even against the struggling Pound, fell -0.45% and -0.39% respectively on the day.
  • Touching on the Pound, Sterling had a mixed day’s trading, enjoying gains against a number of major currencies including the Euro (+0.29% at 1.1252) and Canadian and Aussie Dollars as previously mentioned. But on the flip side the Pound fell against the US Dollar and the Yen by -0.34% and -0.21% respectively.
  • Speaking yesterday afternoon Bank of England Governor Mark Carney said he welcomed Theresa May’s Brexit deal, with particular support for the transitional arrangements in the withdrawal agreement. Carney added that simply crashing out of the EU with no transitional arrangement could lead to a large negative shock akin to the 1970’s oil shock.
  • US Building Permits 1.26M as expected
  • US Housing Starts 1.23M as expected
  • NZ Global Dairy Trade Index -3.5% (-2.0% Previous)
  • The DUP continued to cast further doubt on their allegiance to Theresa May yesterday, with the Northern Irish party insisting they will ‘of course’ vote against the PM’s Brexit withdrawal agreement. The 10 DUP MP’s have been propping up the Tory Government in Parliament following a controversial deal which involved £1bn of extra funding going to Northern Ireland.
Overnight

  • Japan All Industries Activities m/m -0.9% (-0.8% Exp)
  • Once again US President Trump took the opportunity to reiterate that he would like to see the Federal Reserve lower interest rates when questioned on the state of the economy and financial markets. Up to now the Fed has stayed on their path of gradual rate hikes much to the President’s disdain.
  • The President might take solace from at least one Fed member technically being on his side. Fed Member Kashkari said overnight that continuing to raise interest rates could trigger a recession.
  • UK PM Theresa May will head to Brussels later today in a bid to finalise the Brexit withdrawal agreement and get a more concrete deceleration on a potential future trading relationship.
  • Irish Foreign Minister Simon Coveney has said the EU will stand firm and will not alter any of the text in the draft withdrawal agreement despite widespread calls from UK Politicians for amendments.
Today
  • UK Public Sector borrowing is the key print at 9.30am this morning.
  • Good number of data releases out of North America this afternoon, but US Core Durable Goods Orders at 1.30pm and US Consumer Sentiment at 3pm are the higher impact figures.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1236 -0.10
GBP/USD 1.2816 +0.24
EUR/USD 1.1406 +0.33
AUD/USD 0.7244 +0.44

 

Time (GMT) Region Data Release Forecast Previous
09.30 GBP Public Sector Net Borrowing 5.6Bn 3.3Bn
13.30 CAD Wholesale Sales m/m 0.1% -0.1%
13.30 USD Core Durable Goods Orders m/m 0.4% 0.0%
13.30 USD Unemployment Claims 215K 216K
15.00 USD Revised UoM Consumer Sentiment 98.4 98.3
15.00 USD Existing Home Sales 5.20M 5.15M