Morning Report: 13 November 2018

November 13, 2018

GBP. Sterling closed lower against the US dollar yesterday after a short-lived rally in the afternoon on some thin positive Brexit headlines evaporated in the evening. After the weekend’s reports of further UK Cabinet opposition to her negotiating strategy, Theresa May gave a speech last night in which she said talks with the EU were “in the endgame”, while Michel Barnier told EU ministers “the parameters of a possible agreement are very largely defined”. Aside from the platitudes, there was little in the way of hard updates on negotiations or the state of internal Conservative party power balance. Today at 09:30 GMT Labour Market data including the Average Earnings Index and the Unemployment Rate will be released.

EUR. The single currency lost almost a full percentage against the dollar yesterday, on a day that saw a 17 month low on EURUSD and had the euro dangling at the bottom of the G10 currency ranks. Euro’s move yesterday seem to have been instigated by pound sterling taking a leg lower as hopes for a quick Brexit deal are fading. Traders seem to be waking up to the fact that an unorderly Brexit will hurt the European Union as well, while the bloc is already struggling with their insurgent Italians, slowing growth and soft inflation, which all drags on the euro. Italy is due to resubmit a budget today to the EU that was rejected in October in an unprecedented manner. However, the Italian government so far has made it clear it will make only make minor concessions, which basically keeps the country on a collision course with the bloc. German ZEW Economic Sentiment has been negative since the start of 2018 and today’s reading at 10:00 GMT expects one of the lowest readings in 5 years.

USD. The greenback was unchallenged yesterday and rose to the top of the currency board as other currencies fell victim to crises of their own making and as a result flights to safety lifted the greenback to a 17 month high. The Federal Budget Balance is released tonight at 19:00 GMT, although for the real data-inspired action we’ll likely have to wait to the Consumer Prices on Wednesday and Retail Sales on Thursday.

CAD. Oil prices slipped as President Trump criticized Saudi Arabia for their plans to cut oil production, which temporarily weighed on resource sensitive currencies, but in the end couldn’t prevent the loonie from being one of the strongest performers of the day. Canada enjoyed a bank holiday yesterday and the rest of the data calendar for the week seems sparse, which implies oil prices and movements on other currencies may mostly determine the loonie’s faith this week.

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