Newsletter – 26th October 2017

Morning Bulletin

Yesterday

  • Sterling made solid gains across the board during yesterday’s trading, underpinned by the better than expected Q3 print for UK GDP. Expecting growth of 0.3%, the actual print of 0.4%, albeit it far from stellar, was seen by many as giving the Bank of England the green light to hike rates next week. That would be the first rate hike since the financial crisis.
  • Soon after this figure we also heard from UK Chancellor Hammond who said the GDP print showed that the UK economy is successful and resilient, with a record number of people in employment.
  • GBP/EUR jumped from the Mid-1.1100’s to a day’s high of 1.1259 following the data, before closing the day up +0.55% at 1.1220.
  • GBP/USD fared even better closing the day up +0.91% at 1.3250, having been trading at 1.3120 ahead of the GDP figure.
  • The UK’s Brexit Department has confirmed they expect a vote to be held by Parliament on any final Brexit deal, before any vote by the EU.
  • In stark contrast to the Pound, the Canadian Dollar was the day’s biggest faller, declining sharply followng the Bank of Canada’s rate decision and monetary policy report. The BOC’s benchmark rate was held at 1.00% as expected but it was the accompanying report that hit the Dollar, with policymakers citing the strenghtening CAD Dollar and issues sorrounding NAFTA as reasons for caution when considering future rate hikes. It’s worth noting the BOC had hiked rates in their previous two meetings.
  • There were some solid US releases yesterday afternoon:
    • Core Durable Goods Orders m/m 0.7% (0.5% Exp)
    • HPI (House) m/m 0.7% (0.4% Exp)
    • New Home Sales 667K (555K Exp)
Overnight

  • According to a Guardian report, the EU will likely only offer the UK a 20 month transitional period taking us up to December 2020, despite calls for up to 5 years from the Irish government.
  • President Trump has praised current Fed Chair Janet Yellen in comments last night, keeping the door open on her chances of another term in office.
  • New Zealand Trade Balance -1143M (-900M Exp)
  • Japan SPPI y/y 0.9% (0.8% Exp)
  • Australia Import Prices q/q -1.6% (-1.5% Exp)
  • Spanish Unemployment Rate 16.4% (16.6% Exp)
Today
  • All attention will be on the ECB press conference later today. With rates expected to be left on hold at 0.00% it will be any plans for tapering the QE program that will impact currency markets.
  • There are also a number of US data releases due, with Unemployment Claims headlining.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1196 -0.24
GBP/USD 1.3236 -0.15
EUR/USD 1.1817 +0.04
AUD/USD 0.7698 -0.04

 

Time (GMT) Region Data Release Forecast Previous
09.00 EUR Eurozone M3 Money Supply y/y 5.0% 5.0%
09.00 EUR Eurozone Private Loans y/y 2.8% 2.7%
11.00 GBP CBI Realised Sales 14 42
12.45 EUR ECB Minimum Bid Rate 0.00% 0.00%
13.30 EUR ECB Press Conference
13.30 USD Unemployment Claims 235K 222K
13.30 USD Wholesale Inventories m/m 0.4% 0.9%
15.00 USD Pending Home Sales m/m 0.2% -2.6%