Morning Report: 8 November 2017

November 8, 2017

GBP Sterling was uneventful on the whole yesterday, seeing a wobble in the morning and early afternoon that soon reversed to leave it closing essentially flat against USD and EUR. A number of minor Brexit related headlines have failed to have much durable currency effect, ranging from fresh posturing from Brussels urging the UK to make concessions in the near future, to requests for clarity from the Government from London financial institutions. The Halifax House Price Index rose 0.3% in October, bringing annual growth to its fastest since the start of the year.

EUR The euro reached its lowest level against USD since July yesterday, despite a story citing anonymous European Central Bank sources claiming the Governing Council’s recent QE extension was subject to significant internal opposition. Eurozone Retail Sales jumped 0.7% in September, according to official Eurostat estimates, almost erasing the last two months of contractions. No headline euro data will be released today.

USD The dollar weakened overnight after new reports emerged that Republican lawmakers in the Senate were considering delaying the proposed tax reforms currently making a torturous journey through congress. Yesterday’s data included a firm print for the IBD Economic Optimism index, and another month of over 6m job openings in the Job Openings and Labour Turnover Summary. New Federal Reserve Governor Randal Quarles gave his first speech since being confirmed, and steered clear of monetary policy, instead speaking in favour of reduced banking regulation. Donald Trump’s tour of Asia continued yesterday with an uncharacteristically diplomatic series of statements about North Korea, where he called on Pyongyang to “come to the table and make a deal”, while reaffirming the USA’s military alliance with South Korea.

CAD The loonie was experiencing weakness across the board yesterday and closed weaker versus the US dollar for the first time in five days. The oil price saw an intraday peak as rhetoric between Saudi Arabia and Iran esculated, but closed below the opening quote, possibly putting downwards pressure on CAD. The speech that Bank of Canada Governor Stephen Poloz gave yesterday proved uneventful overall, with Poloz discussing inflation uncertainty in depth but adding little new material information. Today at 13:15 BST Canadian Housing Starts will be published, followed at 13:30 BST by month-on-month change in building permits.

UK news

  • FT: Wall St warns Trump team of Brexit ‘point of no return’ High-level meetings hear lack of clarity threatens thousands of UK financial jobs. A group of large financial institutions with big London operations, led by Wall Street’s pre-eminent banks, have told the US commerce secretary that Britain’s unstable government and slow progress in Brexit planning may force them to start moving thousands of jobs out of City in the near future. The warnings came on Friday during a closed-door meeting between executives from the banks, which included JPMorgan Chase, Goldman Sachs and HSBC, and Wilbur Ross during the US commerce secretary’s visit to London, according to people briefed on the discussions.
  • Reuters: Bank of England sees slower investment in 2019 and 2020 British companies are likely to keep on increasing investment at a modest pace over the next year before weaker increases over the following two years, the Bank of England said in a report on Wednesday. Economic uncertainty was the biggest drag on investment plans,” the BoE said, citing a survey of 375 firms. “Expectations about future trading arrangements and other factors related to the United Kingdom’s decision to leave the European Union, such as concerns around the future availability of overseas labour, were also reported to be restraining investment,” it said.

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