Morning Report: 18 December 2017

December 18, 2017

GBP Sterling weakened substantially on Friday, as the boost it enjoyed from the formal announcement of a deal to move Brexit talks on to phase 2 proved to be a sugar rush. This morning’s political headlines are a familiar mix of Tory infighting, posturing from all sides, and dissent from Foreign Secretary Boris Johnson, though none have had a noticeable effect on sterling. This morning’s main release will be Industrial Order Expectations from the Confederation of British Industry, at 11:00 GMT.

EUR After a brief pause on Friday morning, EURUSD resumed its downwards trend as the greenback continued to pick up momentum. This week’s data calendar will be slow for the single currency, although the final revision for November Consumer Price Index inflation in November will be released this morning at 10:00 GMT. The German IFO Business Climate survey will be released tomorrow.

USD Dollar strength is emerging as a theme of global markets this morning, as the greenback edged higher overnight after strengthening on Friday, amid optimism that tax reform legislation may finally be passed this week. The legislation as currently proposed would probably only add a very modest uplift to economic growth, but it represents the first major legislative achievement for the Trump administration and Republican Party. Today at 15:00 GMT the NAHB Housing Market Index will be released as the day’s sole major economic data. Tuesday will see more housing market data including Building Permits, and Durable Goods Orders will be released alongside the PCE Price Index on Friday.

CAD The loonie got off to a good start on Friday, only to begin weakening around noon, and eventually experienced its weakest point against the US dollar in more than two weeks. October Manufacturing Sales were disastrous and fell 0.4% on the month, compared to expectations of 0.9% growth. Today at 13:30 GMT, Foreign Securities Purchases will be released.

UK news

  • Reuters: May to pitch status quo Brexit transition to parliament. LONDON (Reuters) – Prime Minister Theresa May will pitch her plan for a Brexit transition period with unchanged access to European Union markets when she briefs MPs on Monday about her latest negotiating trip to Brussels.
  • Express: Johnson DEMANDS Britain make a clean break from Brussels as Cabinet truce crumbles. The Foreign Secretary, an ardent Brexiteer, has long raised his head above the parapets of parliament to make clear his vision for the nation’s future.
  • Guardian: ‘No way’ – Barnier says UK will not be allowed bespoke Brexit trade deal. Michel Barnier, the EU’s chief Brexit negotiator, has given an interview to Prospect magazine re-iterating some of the EU’s key demands.

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