Morning Report: 12 December 2017

December 12, 2017

GBP Sterling weakened further yesterday, approaching last week’s lows as various political headlines continued to circulate after Friday’s breakthrough in Brexit negotiations. It is worth noting International Trade Secretary Liam Fox explicitly said yesterday that Theresa May’s Government is seeking a trading relationship with the EU that is “virtually identical” to the current arrangements, further reinforcing the idea that Theresa May is not seeking a hard Brexit. Today’s main data release is inflation from the Office for National Statistics, at 09:30 GMT.

EUR The euro was once again out of the spotlight yesterday, with a minor rally in its value already having been completely reversed over the course of this morning. This morning’s main data release will be the widely followed ZEW Economic Sentiment Survey, which will be released at 10:00 GMT for both the eurozone as a whole and the crucial German economy. European Central Bank President Mario Draghi will speak at 19:00.

USD The dollar’s momentum slowed yesterday, after a five day winning streak last week for the weighted DXY index. The Job Openings and Labour Turnover Summary showed open positions falling slightly, after months of near record openings. Today’s data calendar is more eventful, with the NFIB Small Business Index out at 1100 GMT, followed by the Producer Pride Index at 13:30. However, the markets main focus will be tomorrow’s Federal Reserve meeting. The Fed are widely expected to hike interest rates once more, so the main source of interest will be whether there is any change to their current forecast for a further three hikes next year.

CAD USDCAD flatlined again yesterday, trading in a narrow range with few events to speak of. Nothing’s on the calendar today, although NAFTA talks will continue in Washington this week, raising at least the dim possibility of some headline related volatility.

UK news

  • Reuters: UK inflation hits nearly six-year high of 3.1 percent, oil puts more pressure on factories. LONDON, Dec 12 (Reuters) – British inflation unexpectedly rose to its highest level in nearly six years in November, tightening the post-Brexit vote squeeze on households whose spending is the main driver of the country’s economy.
  • Guardian: Surveillance firms spied on campaign groups for big companies, leak shows. British Airways, the Royal Bank of Scotland and Porsche are among five large companies that have been identified as having paid corporate intelligence firms to monitor political groups that challenged their businesses, leaked documents reveal.

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