Morning Report: 30 November 2017

November 30, 2017

GBP Sterling hit a two month high against USD overnight, as good news on the political front continued to break. After Monday’s reports that a financial settlement had effectively been reached in Brexit talks, The Times reported overnight that a “negotiator” had said a breakthrough on the Northern Ireland border issue was developing. The border issue is the last substantial block to true trade negotiations starting, ahead of a major EU summit on December 14th. Notably, Eurosceptic elements of the Conservative Party have been quiet this week, with no major figures attempting to blast May’s concession on the divorce bill. Nationwide’s House Price Index was released this morning, showing a 0.1% increase in November.

EUR EURUSD traded sideways yesterday, after the euro pared back some of its recent gains on Tuesday. The crucial story of the last week has been the possible resumption of coalition talks between Angela Merkel’s CDU party and former partners the Social Democrats. Although t here’s been no major breakthroughs, news emerged that the Social Democrats are in the process of passing party resolutions to enable the party leadership to negotiate for a coalition. Yesterday’s data included survey figures from the European Commission that showed various confidence indices at multi decade highs, including a 10 year high for the Economic Sentiment Indicator. Employment plans from businesses were the most optimistic in 30 years, further underlining the drastic turnaround in the eurozone’s economic fortunes over the last couple of years. This morning’s main release will be eurozone Consumer Price Index inflation at 10:00 GMT, which will be accompanied by the Unemployment Rate.

USD Although USD struggled to make inroads against the euro and weakened to sterling, the greenback did not perform too badly yesterday and made enough gains elsewhere to leave the weighted USD index DXY trading flat on the day. Gross Domestic Product growth in the third quarter was revised up to an annualised rate of 3.3%, as forecast, as the additional data available since the advance estimate indicated the economy had seen more investment than previously thought. Pending Home Sales also rose by substantially more than expected in October, rising 3.5% to buck the downwards trend seen in recent months. Today at 13:30 GMT Personal Spending and Income data will be released, alongside the crucial Personal Consumption Expenditures Price Index, the Federal Reserve’s preferred inflation measure.

CAD The loonie softened further yesterday, as crude oil prices suffered amid conflicting reports of the likely outcome of this week’s OPEC meeting in Vienna. An extension in the cartel’s current production restrictions still seems the most likely outcome, although reportedly Russian delegates are concerned about agreeing on overly ambitious restrictions. The full cartel meeting will begin today, after days of preliminary and partial talks, meaning that an announcement is highly likely. Canadian Current Account data will be released at 13:30 GMT.

UK news

  • Reuters: Trump hits out at May over criticism of sharing far-right videos. U.S. President Donald Trump sharply rebuked British Prime Minister Theresa May on Twitter after Britain criticised him for retweeting anti-Islam videos originally posted by a leader of a British far-right fringe party.
  • Guardian: NHS plans to ration care access in bid to force through extra funding. NHS bosses are to meet to discuss plans to ration and delay patients’ access to care, which could set them on a collision course with ministers over health funding. NHS England’s board will publicly debate what the service will and will not be able to afford to do next year after Philip Hammond gave it less than half the extra money it said it needed.
  • Times: Britain close to Irish border deal. EU leaders are preparing to offer a two-year Brexit transition deal as early as January after negotiators said that they were close to a breakthrough over the Northern Ireland border.

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