Newsletter – 21st September 2017

Morning Bulletin

Yesterday

  • UK Retail Sales was the only key figure yesterday morning and it didn’t disappoint. Expecting sales growth of just +0.2% during August, the actual figure of +1.0% underpinned a strong morning for the Pound. This was the highest print since May and was attributed to consumer spending in department stores and on home improvements.
  • In the immediate aftermath of this figure Sterling rallied to 1.1326 against the Euro and 1.3607 against the US Dollar.
  • US Existing Home Sales 5.35M (5.46M Exp)
  • Speaking yesterday ECB Member Knot said that the recent rise in the Euro was a reflection of a strong Eurozone Economy, and supported calls for the Central Bank to start winding down its unprecedented stimulus measures.
  • With little to no data due for the remainder of yesterday morning/afternoon all attention was focused on the US FOMC meeting in the evening.
  • As expected the Federal Reserve opted to keep rates on hold at <1.25%, whilst confirming their intentions to begin reducing its balance sheet next month.
  • Crucially the Fed’s ‘Dot Plot’ revealed they continue to forecast one more rate hike in 2017, a further three in 2018, two in 2019 and one in 2020.
  • Speaking afterwards in a press conference Fed Chair Yellen said that the shortfall in inflation was a bit of a mystery to the committee, but that it didn’t reflect the broad economic conditions.
  • The US Dollar rallied in FX space following the Fed meeting. GBP/USD had spiked to a high of 1.3655 ahead of the meeting but plummeted down to a day’s low of 1.3452 shortly after, whilst similarly EUR/USD spiked to 1.2034 before dropping back to trade below the 1.1900 handle.
Overnight

  • New Zealand GDP q/q 0.8% as expected
  • New Zealand Visitor Arrivals m/m -0.3% (-5.3% previous)
  • The Bank of Japan kept interest rates on hold at -0.10% this morning, with no changes to their monetary stimulus program. Members voted 8-1 in favour of the action, the surprise twist being that new board member Kataoka voting against this action
  • Swiss Trade Balance 2.17Bn (2.41Bn Exp)
  • The Aussie Dollar is on the back-foot this morning following comments for RBA Governor Lowe.
Today
  • Key this morning will be UK Public Net Sector borrowing due at 9.30am.
  • This afternoon US Unemployment Claims and Philly Fed Manufacturing will be closely watched.
  • Also worth looking out for comments from ECB President Draghi who speaks at 2.30pm.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1352 +0.04
GBP/USD 1.3504 +0.09
EUR/USD 1.1895 +0.04
AUD/USD 0.7962 -0.86

 

Time (GMT) Region Data Release Forecast Previous
09.30 GBP Public Sector Net Borrowing 6.5Bn -0.8Bn
09.30 GBP High Street Lending 41.7K 41.6K
13.30 CAD Wholesale Sales m/m -0.7% -0.5%
13.30 USD Unemployment Claims 302K 284K
13.30 USD Philly Fed Manufacturing Index 17.3 18.9
14.00 USD HPI m/m 0.4% 0.1%
14.30 EUR ECB President Draghi Speaks
15.00 EUR Eurozone Consumer Confidence -2 -2