Newsletter – 9th November 2018

Morning Bulletin

Yesterday

  • Such has been the story of the week so far, economic data was incredibly thin on the ground yesterday.
  • Having been one of the weaker performers in the run up to, and following the Mid-term elections, perhaps unsurprisingly the US Dollar was one of yesterday’s strongest currencies as markets and investors took full stock of the results and the implications for the US economy going forward.
  • The Dollar closed European trading up +0.24% against the Pound at 1.3092.
  • Similarly the Dollar gained +0.30% against the Euro, closing the day at 1.1391.
  • The European Commission released their quarterly growth forecasts yesterday morning and they showed that growth could be set to slowdown amid the backdrop of Brexit and tensions with Italy.
  • With regards to Italy the EU Commission said that the Italian Economy will grow at a slower pace in the next two years than the Italian Government thinks. This further calls into question the validity of the Italian Governments proposed 2019 draft budget, as the countries budget deficit would be higher than assumed by Rome.
  • In response to the report, Italian Finance Minister Tria reaffirmed his governments commitment to the 2.4% deficit target for 2019. Italian PM Conte also stated the EU had underestimated the positive impact the budget will have on the economy.

 

Overnight

  • There was a somewhat surprise rally in the US Dollar overnight and this morning off the back of the US Federal Reserve meeting. Despite the Fed leaving rates on hold at 2.00-2.25% as expected and there being no real change to their policy statement the Dollar still advanced in FX space. The accompanying statement did suggest the Fed would continue on the path of tightening with the potential for a fourth rate hike in December.
  • According to the latest Reuters poll of leading economists, there still remains a one in four chance that the UK will leave the European Union with no-deal.
  • In their quarterly statement on monetary policy, the Reserve Bank of Australia appear increasingly confident on growth prospects of the economy but are still cautious over household income and debt. The official cash rate looks set to remain on hold until there is a further fall in the unemployment rate and an increase in inflation.
Today
  • Raft of UK economic data set for release at 9.30am.
  • UK data includes Manufacturing Production, GDP and Trade Balance.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1467 -0.23
GBP/USD 1.3005 -0.43
EUR/USD 1.1340 -0.19
AUD/USD 0.7244 -0.15

 

Time (GMT) Region Data Release Forecast Previous
09.30 GBP GDP m/m 0.1% 0.0%
09.30 GBP Manufacturing Production m/m 0.1% -0.2%
09.30 GBP Prelim GDP m/m 0.6% 0.4%
09.30 GBP Goods Trade Balance -11.4Bn -11.2Bn
TBC GBP NIESR GDP Estimate 0.7%
13.30 USD PPI m/m 0.2% 0.2%
14.05 USD Fed Member Quarles Speaks
15.00 USD Prelim UoM Consumer Sentiment