Newsletter – 23rd November 2017

Morning Bulletin

Yesterday

  • Chancellor of the Exchequer Philip Hammond laid out the Budget in the Commons yesterday in a statement that was overshadowed by revised assessments of the UK economy’s future growth prospects.
  • The Budget itself was free of any controversy with the key points being;
    • Stamp duty for first-time house buyers has been scrapped for properties worth up to £300,000.
    • £44bn will committed to support a housing target of 300,000 new homes a year by the mid 2020s.
    • Vehicle excise duty for new diesel cars not meeting the latest standards to rise by one band next April.
  • Hammond told MPs that the growth forecast has been cut from 2% to 1.5%. Similarly forecasts for 2018, 2019, 2020 and 2021 have been revised down to 1.4%, 1.3%, 1.5% and 1.6%, respectively (BBC).
  • Annual CPI is forecast to fall from 3% to 2% later this year and productivity growth has been revised down by an average on 0.7% per year up to 2023.
  • It is expected that 600,00 more people will be employed by 2022.
  • The Government will set aside £3bn over the next two years to prepare the UK for ‘every possible outcome’ as Brexit negotiations continue.
  • The markets reaction was somewhat muted. Sterling did weaken slightly against most other majors over the course of the day excluding against the US dollar.
  • GBP/EUR closed 5 points lower after opening at 1.1276 and closing at 1.1271. 
  • The US dollar weakened yesterday following investor concerns that low longer-term government bond yields may be signalling a weakening outlook for growth and inflation. (WSJ)
  • As a result of this GBP/USD rallied by 0.64% to close 1.3322 after opening at 1.3237.
  • Core durable goods orders m/m from the US came in as expected at 0.4%, unemployment claims came in at 239K and durable goods orders m/m came in weaker than expected at -1.2% vs 0.4% expected.
  • At 7pm the FOMC minutes were released which showed general support for a 3rd rate hike this year.
 
Overnight
  • Retail sales q/q from New Zealand came in at 0.2% vs 0.4% expected and core retail sales q/q came in weaker than expected at 0.5% vs 0.9%.
  • GBP/JPY, GBP/AUD and GBP/NZD are currently trading 147.88, 1.7449 and 1.9303, respectively.
Today
  • Today is Thanksgiving holiday in the US.
  • Flash manufacturing PMI and flash services PMI from Europe came in at 60.0 vs 58.3 and 56.2 vs 55.3, respectively.
  • Second estimate GDP q/q from the UK has come in at 0.4% as expected.
  • This afternoon we expect core retails sales m/m from Canada.
Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1230 -0.36
GBP/USD 1.3300 -0.17
EUR/USD 1.1842 +0.17
AUD/USD 0.7619 +0.07

 

Time (GMT) Region Data Release Forecast Previous
12:30 EUR ECB Monetary Policy Meeting Accounts
13:30 CAD Core Retail Sales m/m 0.9% -0.7%
13:30 CAD Retail sales m/m 0.9% -0.3%
21:45 NZD Trade Balance -750M -1143M