Powell reiterates Clarida’s dovish tones

November 30, 2018

GBP: Little occurred in Brexit politics yesterday apart from the confirming of May vs Corbyn next week in a live debate. The likelihood of the draft deal being tweaked prior to its final vote is increasing as May hammers home the increasing division of the country if lawmakers reject her deal before flying to the G20. Further to this, she confirmed that she will not resign which blows prior rumours out of the water that Brexiteers will pass her bill if a formal resignation date was attached to it. Today will likely remain quite for sterling with little data released while May is in Buenos Aires for the start of the G20 meet.

EUR: The euro ranked in third in the G10 currency board, showing gains of a quarter of a percentage point against the dollar during yesterday’s session. Positive confidence indicators may have played a role in this result, with business climate and industrial and services confidence coming in above expectations. The Italian budget saga continued with a meeting between Premier Conte and European Commissioner Moscovici, where conversations on a 2% revised deficit are not yet ruled out. Today, data releases for the Eurozone, however, may not add up further strength to the euro , with soft readings for unemployment rate and CPI growth expected at 10:00 GMT.

USD: The dollar had a mixed bag yesterday as the Fed stated that another hike was probable “fairly soon” but reiterated dovish tones from Fed Chair Powell and Vice Chairman Clarida. The release of last month’s Fed meeting minutes saw the need for “further gradual increases” but the question remains for the Fed over how gradual they will really be. On top of this, they noted that a technical adjustment will be needed in the December meeting after interest rates begin to test the upper bound of their target range again. Meanwhile, the US and China are looking to calm tensions and find a way of delaying further tariffs until Spring in exchange for big changes in Chinese economic policy. Meanwhile, Trump has called off his meeting with Vladimir Putin this weekend in Buenos Aires after the capture of 3 Ukrainian vessels. No top-tier data is released for the greenback today and eyes will be firmly fixed on developments in geopolitics and oil markets over the weekend.

CAD: Another day of flat oil prices saw the loonie post losses against the dollar prior to the G20 summit that is expected to shed further light on the future supply of oil ahead of an Opec meeting next week. Although production cuts are expected to be agreed by major oil producers, much uncertainty remains on prices picking up on the back of Trump’s political pressures. The loonie has recently been trading off of developments in the crude market, but as the first data release of the week comes to the fore, the release of Gross Domestic Product data for September at 13:30 GMT may give the loonie another dynamic to trade on.

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