Morning Report: 9 May 2018

May 9, 2018

GBP. Sterling had an uneventful day yesterday, remaining under pressure against USD but managing to close more or less flat after some losses in the afternoon. Political headlines had a muted effect, as Theresa May appeared to overlook Foreign Minister Boris Johnson’s latest public opposition to her Government’s plans for Brexit, and the House of Lords saw another vote in favour of keeping Britain in the European single market. The only data of note was the Halifax House Price Index, which showed prices dropping 3.1% year on year. The empty data calendar gives markets all the opportunity to prepare for the Bank of England Rate Decision of tomorrow, which in all likelihood will not see a rate hike, even though this was still broadly anticipated mere weeks ago.

USD. The greenback shrugged off yesterday’s announcement that the Trump Administration will not renew the Iranian nuclear deal. Job Openings soared to 6.55 million for March, hitting an all time high. The number of new hires fell by 86,000 in March, further suggesting significant tightening in the labour market. Today’s data calendar includes several important releases including Producer Prices at 13:30 BST and Wholesale Inventories at 15:30.

EUR. The euro continued its relentless declines against USD yesterday, despite some fairly encouraging data releases. German Industrial Production rebounded 1% in March, and the nation’s Trade Surplus swelling to 22 bn in March. This morning’s data has been less cheery. French Industrial Production defied expectations for an expansion in March and contracted 0.4%. No further euro data is scheduled today.

CAD. Yesterday the loonie got itself an appointment booked with the FX hammer, that more or less indiscriminately visited all resource-sensitive currencies like NOK, NZD and AUD. Economic data was rather scarce for Canada yesterday, with housing starts coming in virtually exactly on expectations was about the most exciting occurance of the day. Today sees Building Permits at 13:30 BST, giving us more insight about how the recent slump in house sales volumes may translate into other housing market indicators.

UK news

  • Reuters: North Korean leader Kim visits China, meets President Xi North Korean leader Kim Jong Un visited China and met President Xi Jinping, state media of both countries said on Tuesday, their second encounter in two months in a flurry of diplomatic engagement that has eased tensions on the Korean peninsula.
  • Reuters: Oil drops despite Trump’s exit from Iran nuke deal Oil prices tumbled from 3-1/2 year highs even as President Trump pulled the U.S. out of the multi-national Iran nuclear agreement and announced plans for renewed sanctions at ”the highest level.”
  • The Guardian: Theresa May forced to give MPs single market vote after shock defeat MPs will have a vote on remaining in the European Economic Area – effectively a vote on the single market – after a shock defeat for the government in the Lords. It means the Brexit strategy of both Theresa May and Jeremy Corbyn has been blown apart in the last 24 hours.

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