Newsletter – 5 January 2017

Morning Bulletins

Yesterday:

  • Relatively good day for Sterling, most notably against the US Dollar as it closed the day up 0.50% against the greenback, trading around the 1.2300 handle. Any Sterling strength on the day was largely underpinned by a solid UK Construction PMI reading of 2 (52.6 Exp).
  • The Euro had a particularly good day’s trading against the Pound and the US Dollar, buoyed by some encouraging Eurozone CPI data released in the morning. Expected to rise by 1.0%, inflation actually increased by 1% year on year to December, up from just 0.6% in November.
  • Marian Le Pen, leader of the French ‘National-Front’, said yesterday that she did not want France to the leave the EU as such, but wants to lead France out of the Euro and redenominate French government debt in a new national currency.

Overnight & This Morning

  • Key Points from the US Fed’s FOMC December meeting:
    • The impact of Trump’s policy agenda was widely discussed at December meeting.
    • Almost all members cited upside risks to their economic growth forecasts based on the prospect of expansionary fiscal policies under a Trump government. In this scenario the Fed may need to raise rates at a faster pace.
    • The Fed officials also cited there would be considerable uncertainty about Trump’s impact on the economy, without knowing what policies could be introduced and whether they gained support in congress.
  • Sterling is on the back-foot this morning as a Telegraph report suggests UK PM Teresa May is prepared to withdraw from the single market unless the UK is given full control of borders.

Today:

  • A fairly full data calendar ahead. Kicking off this morning is the final UK PMI print of the week, this time we get Services PMI at 9.30am with an expected reading of 54.8. Key this afternoon will be US Employment data released between 1.15pm and 1.30pm and then finally at 3pm we look to US ISM-Non Manufacturing PMI data.

 

Major Currency Pairs

(PLEASE NOTE THESE RATES ARE AT TIME OF DISTRIBUTION)

Currency

Pair

Interbank

Rate

% change on day
GBP/EUR 1.1675 -0.60%
GBP/USD 1.2293 -0.25%
EUR/USD 1.0527 +0.38%
AUD/USD 0.7297 +0.19%

 

Economic Calendar

(ALL TIMES GMT)

Time Region Data Release Forecast Previous
09.10 EUR Eurozone Retail PMI   48.6
09.30 GBP Services PMI 54.8 55.2
10.00 EUR Eurozone PPI m/m 0.2% 0.8%
12.30 EUR ECB Monetary Policy Meeting Minutes    
13.00 GBP MPC Member Haldane Speaks    
13.15 USD ADP Non-Farm Employment Change 171K 216K
13.30 CAD RMPI m/m -1.5% 3.3%
13.30 USD Unemployment Claims 262K 265K
15.00 USD ISM Non-Manufacturing PMI 56.6 57.2