Newsletter – 5th December 2017

Morning Bulletin

Yesterday

  • Unsurprisingly with a lack of economic data, and with UK PM Theresa May set for a number of crunch meetings in Brussels, Brexit dominated currency related movements in yesterday’s trading where the Pound was concerned.
  • The Pound has of course been buoyant of late as the prospect of the UK and EU agreeing to advance talks onto the next stage look more and more likely, with reports of agreements nigh on in place on those three crunch areas, namely the Brexit Bill, Citizens Rights and the Irish Border.
  • The Pound surged before Midday following comments from a Belgian MEP who said the EU’s Chief Negotiator Barnier had told lawmakers that a Breakthrough in talks was likely in the day ahead.
  • GBP/EUR rallied to a days high of 1.1418, whilst GBP/USD reached 1.3538.
  • Those gains did not last however, as later yesterday afternoon the EU’s Juncker and PM Theresa May addressed the Media and stated that it hadn’t been possible to reach a deal today, but crucially Juncker said this did not amount to a failure and that he remained confident significant progress would be made before the crucial EU Leaders Summit on the 14/15 December.
  • The stumbling block to sealing the deal appeared to be the DUP and their position that Northern Ireland must leave the EU on the same terms as the rest of the UK, with DUP Leader Foster stating her party will not accept any regulatory divergence from the UK.
  • Economic data was thin on the ground yesterday:
    • UK Construction PMI 53.1 (51.2 Exp)
    • Eurozone PPI m/m 0.4% as expected
    • US Factory Orders m/m -0.1% (-0.3% Exp)
  • In Germany, SPD Leader Martin Schulz has said his party has back proposals to enter talks with Ms Merkels conservatives, with talks set to start next week.
Overnight

  • The Reserve Bank of Australia was firmly in focus overnight and the central bank opted to hold the Cash (Interest) Rate at 1.50% as expected, with little change to their monetary policy statement. The RBA signaled no plans to move rates in the near term, despite a number of advanced economies shifting towards withdrawing stimulus (e.g. US, UK, Eurozone).
  • Australia Current Account -9.1Bn (-8.8Bn Exp)
  • Australia Retail Sales m/m 0.5% (0.3% Exp)
  • China Caixin Services PMI 51.9 (51.5 Exp)
  • UK BRC Retail Sales (Nov) +0.6% (-1.0% Previous)
Today
  • UK Services PMI is our key print this morning at 9.30am.
  • US and Canadian Trade Balances will be in focus at 1.30pm, before the final key print of US ISM Non-Manufacturing PMI due at 3pm.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1297 -0.53
GBP/USD 1.3387 -0.68
EUR/USD 1.1847 -0.14
AUD/USD 0.7642 +0.60

 

Time (GMT) Region Data Release Forecast Previous
09.00 EUR Final Services PMI 56.2 56.2
09.30 GBP Services PMI 55.2 55.6
10.00 EUR Eurozone Retail Sales m/m -0.6% 0.7%
10.00 EUR Eurozone Revised GDP q/q 0.6% 0.6%
13.30 CAD Trade Balance -2.3Bn -3.2Bn
13.30 USD Trade Balance -46.2Bn -43.5Bn
TBC NZD Global Dairy Trade Price Index -3.4%
15.00 USD ISM Non-Manufacturing PMI 59.2 60.1