Newsletter – 29th November 2017

Morning Bulletin

Yesterday

  • In their financial stability report, the Bank of England’s stress tests showed that the UK’s biggest banks would be resilient to deep simultaneous recessions in the UK and Global economies. Furthermore the tests revealed that the UK banking system could continue to support the real economy in the event of a ‘disorderly’ Brexit.
  • Speaking shortly after, BOE Governor Mark Carney again warned that a ‘disorderly’ Brexit, or effectively a no deal scenario, would have serious economic costs for the UK even though the financial system might be able to withstand it.
  • Key points from the OECD’s most recent Economic Outlook:
    • Global Economy growing at fastest pace since 2010
    • Inflation is subdued in major economies and set to remain moderate
    • Sees Global GDP 2017 +3.6% (Prev +3.5%) and 2018 +3.7% (Unch)
    • US GDP 2017 +2.2% (+2.1% Prev) and 2018 +2.5% (+2.4% Prev)
    • UK GDP 2017 +1.5% (+1.6% Prev) and 2018 +1.2% (+1.0 Prev)
  • Raft of data released out of North America yesterday afternoon, albeit they were fairly low impact in nature:
    • Canadian RMPI (Raw Materials) m/m +3.8% (-0.2% Previous)
    • US Goods Trade Balance -68.3Bn (-65.0Bn Exp)
    • US Prelim Wholesale Inventories m/m -0.4% (+0.5% Exp)
    • US Richmond Manufacturing Index 30 (14 Exp)
  • US Consumer Confidence was the key print yesterday afternoon, and it was expected to drop to 124.0 following the 17-year high of 125.9 reported in October. However the reading in fact jumped to a fresh 17-year high of 129.5.
  • Addressing the US Senate Banking Committee yesterday afternoon, Fed Governor Powell said that economic conditions were supportive of a rate hike in December and that the case to do so was coming together.
Overnight

  • Reports overnight that the UK and EU have finally reached agreement over the Brexit Bill have seen the Pound rally in FX space, with GBP/EUR hovering around the 1.1300 handle and GBP/USD trading at 1.3400.
  • Various newspapers have been reporting different settlement figures on the Brexit Bill, with the Telegraph reporting the UK would be willing to pay €45-55Billion, whilst the FT are saying it could be as high as €100Billion.
  • UK BRC Shop Price Index y/y -0.1% (-0.1% Previous)
  • Japan Retail Sales y/y -0.2% (+0.1% Exp)
  • French Prelim GDP q/q +0.5% as expected
  • Spanish Flash CPI y/y +1.6% (+1.7% Exp)
Today
  • UK Net Lending to Individuals and M4 Money Supply will be in focus this morning from 9.30am.
  • This afternoon US GDP is the key print at 1.30pm, followed by Bank of England Governor Mark Carney and US Fed Chair Yellen who are due to speak from 2pm onwards.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1307 +0.36
GBP/USD 1.3420 +0.62
EUR/USD 1.1862 +0.22
AUD/USD 0.7592 -0.02

 

Time (GMT) Region Data Release Forecast Previous
09.30 GBP Net Lending to Individuals m/m 4.3Bn 5.5Bn
09.30 GBP M4 Money Supply m/m 0.3% -0.2%
13.30 USD Prelim GDP q/q 3.3% 3.0%
13.30 USD Fed Member Dudley Speaks
14.00 GBP BOE Gov Carney Speaks
14.45 GBP BOE Member Ramsden Speaks
15.00 USD Fed Chair Yellen Testifies
15.00 USD Pending Home Sales m/m 1.1% 0.0%