Morning Report: 10 January 2018

January 10, 2018

GBP Sterling remained on the back foot yesterday, amid slow news flow. Philip Hammond and David Davis appeared as authors of an article in German Newspaper Frankfurter Allgemeine, appealing for a high level of access to EU markets for the finance sector, based on mutually recognised regulatory regimes. Lead Brexit negotiator Michel Barnier warned last month that “There is no place [for financial services]. There is not a single trade agreement that is open to financial services. It doesn’t exist”. Today at 09:30 GMTIndustrial Production and Construction Output figures will be released alongside the Goods Trade Balance.

EUR The euro weakened further to USD yesterday, but traded flat against sterling. The official eurozone Unemployment rate was 8,7% in December, the lowest since 2009, although disparities remain large between nations.This morning’s sole major release was French Industrial Production, which contracted 0.5% in November, after a 1.7% spike in October.

USD The DXY dollar index rose for the third day in a row, gaining against sterling and euro and paring back the losses it made in the last weeks of 2017. The December NIFB Small Business Economic trends print was 104,9, retracing slightly from the 34 year high of the November reading. Today we have the first of this week’s US inflation trio with the Import Prices at 13:30 GMT followed at 15:30 by the Crude Oil Inventories.

CAD The loonie weakened against USD for the second day in a row, after it gained as much as 4% since the week before Christmas. December Housing Starts came in below expectations at 217K yesterday. The chief economist of the Canada Housing and Mortgage Corporation, which publishes these numbers, sent out a reassuring message arguing “the national trend in housing starts held steady at its highest level since 2008”. Today at 13:30 GMT the monthly Building Permits of November will be released.

UK news

  • Reuters: UK economy set for ‘underwhelming’ 2018, says British Chambers of Commerce. Britain’s economy looks set for an underwhelming 2018, according to a major survey on Wednesday that showed businesses are in a subdued mood ahead of Brexit.
  • Telegraph: German hostility risks derailing UK plans for bespoke Brexit trade deal. Britain’s plan for a bespoke Brexit trade deal is at risk of being derailed by German opposition even before negotiations on the EU-UK future relationship begin later this year, the Telegraph can reveal.

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