Morning Report: 6 November 2017

November 6, 2017

GBP Sterling had a relatively quiet day on Friday, failing to recover any significant portion of its losses incurred after last Thursday’s Bank of England interest rate announcement. The weekend’s political headlines included more scandal for the Conservative Party, and a fresh batch of document leaks on offshore tax structures, though nothing that’s liable to directly affect the value of the pound for now. This will be a somewhat slow week for sterling data, beginning with the British Retail Consortium’s Retail Sales Monitor in the early hours of tomorrow morning. Later in the week, Industrial and Construction Output data will be released on Friday.

EUR EUR nudged down slightly on Friday on the back of a rather empty economic calendar. The ex-Catalan leader Carles Puigdemont turned himself in with the police in Brussels yesterday, only to be released later, as Spain’s constitutional crisis continues. This has already been a busy morning for the euro data calendar, with Services Purchasing Managers Indices across the eurozone printing slightly lower than expected in many instances, although the overall Eurozone Composite PMI beat expectations to rise slightly to 56.0. Sentix Investor Confidence will be released this morning at 10:30 GMT, followed by the Producer Price Index at 11:00 BST.

USD USD has had an uneventful start to the week, with the weighted DXY index trading flat since midnight. Friday’s Non-Farm Payrolls report showed the economy adding less jobs last month than expected by forecasters, while wages were flat on the month. The unemployment rate did fall to just 4.1% however, although the lack of dramatic market reaction to the report illustrates the reduced importance of the report for USD at present, due to the tight labour market. Donald Trump’s state tour of Asia will continue this week, after a round of golf and a fist bump with Japanese Prime Minister Shinzo Abe – and some comments overnight criticising Japan’s trade policies that sent JPY to its lowest level against USD since March. New York Fed Chair Bill Dudley will speak today at 18:10 GMT.

CAD The loonie began the weekend on a high note after labour market data beat all expectations on Friday. CAD sold off earlier last week due to weak GDP data caused by a lower output in the mining and manufacturing sector, but Friday’s data eases these concerns, showing job growth specifically in the manufacturing sector. Meanwhile political reshuffling in Saudi Arabia has sent oil prices to a two year high, lending further support to the loonie. This week’s calendar contains a speech from Bank of Canada Governor Stephen Poloz on Tuesday, followed by housing market data on Wednesday and Thursday. Today at 16:00 GMT the Ivey Purchasing Managers’ Index will be released.

UK news

  • FT: Oil price hits 2-year high as Saudi Arabia targets elite Crude rises after crown prince crackdown leads to arrests of royals, ministers and tycoons. Oil hit a fresh two-year high on Monday after the weekend arrests of at least 11 Saudi Arabian princes and dozens of senior officials and prominent businessmen by the country’s new anti-corruption commission. Brent crude was up 0.8 per cent at $62.55 a barrel on Monday – its highest level since July 2015 – as uncertainty over the situation in Riyadh added to other factors putting upward pressure on oil prices.
  • FT: Huge leak of documents reveals Queen’s offshore investments Wilbur Ross and Lord Ashcroft also feature in ‘Paradise Papers’. A huge leak of financial documents has revealed the offshore interests of hundreds of high-profile companies and individuals, including millions of pounds invested by the Queen’s private estate in a Cayman Islands fund. The revelations are the result of lengthy investigations by journalists across the world, who have examined 13.4m files belonging to professional services firms and offshore corporate registries. The BBC said there was nothing illegal in the investments and no suggestion that the Queen was not paying tax. But it said questions might be asked about whether the monarch should be investing offshore.

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