Morning Report: 20 December 2017

December 20, 2017

GBP Sterling closed flat against USD, and weakened slightly to the euro, which put in a strong performance yesterday. Data flow was practically nonexistent, and the day’s political headlines had little impact. The data calendar begins to pick up again today, with the release of the Confederation of British Industry’s Realised Sales index at 11:00 BST. Bank of England Governor Mark Carney will testify to lawmakers on the Financial Policy Committee’s latest Financial Stability report at 13:15 BST.

EUR The euro saw broad strength yesterday, despite a lack of headlines or significant data. The only release of note, the German IFO Business Climate survey, actually fell slightly short of expectations, with the surveyed institutional investors and analysts reporting a marginally lower level of optimism. This morning’s data has included a soft print for the German Producer Price Index, which rose 0.1% in November, and at 09:00 GMT the eurozone Current Account will be released. German Bundesbank head and chief European Central Bank hawk Jens Weidmann will speak at 13:00 GMT.

USD The rapid progress made towards passing tax reform legislation has been scant comfort to the US dollar over the last 24 hours, and the greenback has come under pressure. The House and Senate passed the latest bill yesterday, meaning the final House vote and ultimate signing is now all but a formality. After the vote, President Donald Trump tweeted “The Unitede [sic] States Senate just passed the biggest in history Tax Cut and Reform Bill”, although as the Financial Times pointed out, this description is disputed by many tax and fiscal policy experts. Housing Market data released yesterday showed better than expected activity in the sector, while the US Current Account deficit was smaller than expected in the third quarter. Today at 15:00 GMT Existing Home Sales data will be released.

CAD The loonie experienced some minor weakness against the US dollar during the afternoon yesterday, only to close more or less flat at the end of the day. No economic data came out, but Canada’s minister of Foreign affairs Chrystia Freeland met with US Secretary of State Rex Tillerson to present a united front on issues ranging from North Korea to NAFTA. The statement showed that Tillerson is still a strong pro-NAFTA advocate within the Trump administration, though it is not helpful for Canada that his position within the administration seems unstable at best. Today at 13:30 GMT monthly wholesale sales from November will be published.

UK news

  • Reuters: Too late, Theresa – Brexit offer to EU citizens leaves many cold. LONDON (Reuters) – Back from Brussels with a hard-fought Brexit deal, Prime Minister Theresa May wrote an open letter to the three million citizens of other European Union states living in Britain.
  • Telegraph: Half of maternity units close their doors to women in labour amid midwife shortage . Half of maternity units had to close their doors to women in labour last year due to shortages of staff, leading midwives have warned.
  • Daily Mail: Trump will visit the UK but NOT meet the Queen. Donald Trump has told British prime minister Theresa May he will visit Britain in the new year – but will not meet the Queen, it emerged Tuesday. The president and the prime minister instead discussed a ‘working visit’ to London, which is pencilled in for late February.

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