Morning Report: 9 November 2017

November 9, 2017

GBP Having sold off yesterday, sterling found its legs overnight and has managed to claw back some of its recent losses. Theresa May’s Government remains beleaguered, with Priti Patel, the international development secretary, resigning from the cabinet this morning following controversy over an unauthorised visit to Israel. Pressure is also mounting from Brussels, who have given a two to three week deadline for Britain to set out how much it is willing to pay as a Brexit divorce settlement. Economic data also failed to help, with the Royal Institute of Chartered Surveyors releasing its monthly survey of members opinions of their local housing markets, which showed a market fall in optimism. The net balance of surveyors reporting price increases in their areas fell to 1%, and the housing market was described as “stuttering”. Today at 13:00 GMT the National Institute for Economic and Social Research will release its latest Gross Domestic Product Growth estimate.

EUR EURUSD traded sideways yesterday, but has seen a break above yesterday’s trading range this morning, helped along by yet another bumper surplus for the German Trade Balance. Yesterday’s paucity of headline dada continues into today, although the European Central Bank’s Economic Bulletin was released this morning. At 10:00 the latest official economic forecasts from the European Commission will be released.

USD USD price action was deeply uninspiring against GBP and EUR yesterday, but the greenback continued its tug of war with petro and resource linked currencies yesterday, losing ground to the loonie, aussie, and kiwi. Donald Trump wrapped up his two day state visit to China with some comments on China’s trade surplus with the US, although interestingly he went as far as asking “who could blame” China for the situation, instead placing the responsibility on past US leaders for the situation. Conventional economic theory holds that it is the United States’ savings and investment levels, not Chinese or even US trade policy, that is primarily responsible for the trade balance. Today at 13:30 GMT, weekly Unemployment Claims will be released, followed at 15:00 by Wholesale Inventories.

CAD The loonie regained momentum against USD yesterday, with oil prices shrugging off data showing an inventory build in North America. Oil prices had a dramatic day, soaring in the middle of the day before settling lower after official EIA inventory data showed a build of 2.2m barrels last week. Canadian Building Permits jumped 3.8% in September, after two months of sharp declines, while Housing Starts rose to 223,000 in in October. Today at 13:30 GMT the New House Price Index will be released.

UK news

  • FT: EU gives UK up to 3 weeks to make Brexit bill offer.  December summit could fall short on transition guidelines without settlement. Brussels is giving Britain two to three weeks to set out how much it is prepared to pay in the Brexit divorce settlement, warning that the EU will otherwise struggle to prepare this year for a transition deal the UK badly wants. According to the informal deadline, unless London makes a big financial offer this month, the bloc may be unable to adopt guidelines for the transition talks at a crucial summit in December. “We need to know soon,” said one senior EU negotiator. “There isn’t much time, there are no shortcuts.”
  • Reuters: In new test for PM May, aid minister resigns.  British aid minister Priti Patel was forced from office on Wednesday over undisclosed meetings with Israeli officials after Prime Minister Theresa May sought to reassert her diminished authority as she negotiates Brexit. Patel, a Brexit campaigner who is popular in the ruling Conservative Party, had to abandon a trip to Africa earlier on Wednesday after being summoned by May to answer questions on more unsanctioned meetings that breached diplomatic protocol. After a hastily arranged meeting not long after Patel landed in London, May’s office released her minister’s letter of resignation, in which Patel said her conduct in Israel had fallen “below the high standards” required of her post. “While my actions were meant with the best of intentions, my actions also fell below the standards of transparency and openness that I have promoted and advocated,” Patel wrote in the letter to May.

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