Newsletter – 24th January 2019

Morning Bulletin

Yesterday

  • Sterling was one of the best performers in FX space once again yesterday.
  • Having opened at around 1.1400 the Pound rallied over the course of the day, hitting a high of 1.1494 before closing around 1.1475.
  • Similarly the Pound rallied from 1.2950 to close the day at 1.3060 against the US Dollar.
  • The Pound’s strength was underpinned by Brexit related stories which suggested there was a strong possibility MP’s could be set to table an amendment to rule out the possibility of a no-deal Brexit and that the motion could have enough support to prevail. UK PM Theresa May has of course refused to rule of a no-deal scenario.
  • According to a CBI survey optimism in UK factories has waned dramatically over the past three months as Brexit concerns and a slowing global economy took hold. The CBI’s quarterly gauge of manufacturing expectations fell to -23 in the three month period to January, that is the lowest reading since July 2016.
  • Canadian Retail Sales fell more than expected in November. Sales were down -0.9% versus an expected drop of -0.6% as sales at gasoline stations and motor vehicle and parts dealers fell.
  • Speaking shortly after, Bank of Canada Governor Poloz said that any future rate hikes would be dependent on data but added the Canadian economy was in good shape.
  • Speaking yesterday afternoon the EU’s Chief Brexit negotiator Michel Barnier said a No-Deal Brexit is now the default position and that preparing for such a scenario was more important than ever. Barnier added that whilst the majority of the commons appear to be against a No-Deal Brexit that didn’t mean it couldn’t still happen.
  • Eurozone Consumer Confidence -8 (-6 Exp)
Overnight

  • Tory MP Jacob Rees-Mogg, arguably the most vocal and influential Brexiteer, has provided Theresa May with some cause for optimism, as he suggested that the PM’s deal could be reformed in order to win around himself and the Tory rebels within the Government. However he stressed that he could not vote any deal through that included the Northern Ireland backstop.
  • The Aussie Dollar is on the front-foot in FX space this morning against all its major currency counterparts with the exception of the Pound. The Aussie has been boosted by some strong employment data released overnight:
  • Australia Employment Change 21.6K (17.3K Exp)
  • Australia Unemployment Rate 5.0% (5.1% Exp)
  • Japan Flash Manufacturing PMI 50.0 (52.7 Exp)
  • The chances of Brexit being delayed looked slightly closer last night as Labour Leader Jeremy Corbyn signalled his party will join those ‘remain’ tory MP’s who are also seeking to prevent a no-deal Brexit.
Today
  • The ECB’s monetary policy meeting will be in focus this afternoon and following a recent run of disappointing data the language used in their discussions will be closely watched for any shift in sentiment. The headline interest rate will almost certainly remain at 0.00%.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1503 +0.18
GBP/USD 1.3051 -0.13
EUR/USD 1.1347 -0.30
AUD/USD 0.7095 -0.61

 

Time (GMT) Region Data Release Forecast Previous
09.00 EUR Eurozone Flash Manufacturing PMI 51.5 51.4
09.00 EUR Eurozone Flash Services PMI 51.5 51.2
12.45 EUR ECB Benchmark Interest Rate 0.00% 0.00%
13.30 EUR ECB Press Conference
13.30 USD Unemployment Claims 219K 213K
14.45 USD Flash Manufacturing PMI 53.5 53.8
14.45 USD Flash Services PMI 54.0 54.4