Dealer Comments

8:15 12 Nov 2018
Morning Comment
Morning Comment

EUR:

Euro/Dollar has broken through a key support level at 1.13 for the first time since June 2017, triggering a number of stops as the Dollar Index hits fresh highs for the year – Brexit and Italy being the main drivers. The deadline for Italy to provide revisions to their fiscal plans are this Wednesday, and according to Reuters, Economy Minister Tria said that Italy could reduce its GDP estimate for the year ahead in order to convince Brussels that Italy would not go above the 2.4% deficit number, while also circulating a potential ‘automatic mechanism’ which would cut public expenses to keep the deficit below threshold. The day ahead it’s light in terms of releases, with Italy and Brexit in the driving seat.

 

No data of note today

UK:

Sterling is the standout weakest currency in G10 as we walk in this morning, with a raft of reports over the weekend not helping sentiment. According to the Independent, PM May has been forced to abandon plans for a emergency cabinet meeting to approve a Brexit deal, while the Sunday Times report that four remain ministers are considering quitting May’s government, while the EU have rejected May’s plans on the border backstop. We continue to expect Sterling volatility for the week ahead, with Brexit Secretary Raab expected to meet Barnier tomorrow.

 

No data of note today

US:

The Dollar is trading superbly well to kick off the week, with the Dollar Index breaking to fresh 2018 highs as concerns over Italy and Brexit weigh on sentiment elsewhere. For the day ahead the Fed’s Daly is due to speak on the economic outlook in the US, but it’s likely to be relatively quiet, with the Veteran’s Day holiday in the US. Main events for the US for the week ahead are CPI (expected to rise to 2.5% from 2.3%) and retail sales data, with the Fed’s Powell due on the wires to discuss the economy on Wednesday.

 

No data of note today

 

 

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Author: Deborah Hamilton

9 Nov 2018

9:38 9 Nov 2018
Morning Comment
Morning Comment

EUR:

The Euro has failed to hold onto its recent gains as tensions in Italy re-emerge ahead of next week’s deadline for Italy to respond to the European Council rejection of its budget plan. Eurogroup President Centeno is in Rome today for meetings and we could see some headlines in relation to the next steps. Data has been light but the Euro is moving close to key support at 1.13 as the Dollar looks to close the week on a positive footing.

 

No data of note

UK:

Sterling still dominated by Brexit headlines but we will get some important data points this morning; namely GDP and Industrial Production. On the Brexit front, the latest reports continue to reference ‘days’ rather than ‘weeks’ for the UK government to finalise its plan; if and when that happens the attention will quickly turn to how PM May can get the plan passed through parliament.

 

UK GDP @ 09:30

UK Industrial Production @ 09:30

US:

In the US, there were no surprises from the Federal Reserve who kept rates unchanged at 2.25%. The statement was largely unchanged from last month with robust household spending and a strong labour market both highlighted. Today we get some 2nd tier data in the form of PPI and Wholesale Inventories; we’ll watch closely for a change in risk sentiment which could provide a further boost to the Dollar ahead of the US Bank Holiday on Monday.

 

US PPI @ 13:30

Wholesale Inventories @ 13:30

Uni. of Michigan Sentiment @ 15:00

 

Author: Deborah Hamilton
Tel: 1800 30 30 03 / +353 (0)1 790 0000
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8 Nov 2018

9:34 8 Nov 2018
Opening comment

EUR:

The Euro’s outlook is mixed today as much of yesterday’s gains against the Dollar have been given back while Eur/Gbp remains under pressure with plenty of positivity surrounding Brexit negotiations. For now, the Euro is being dragged around by events in the US and the UK. ECB President Mario Draghi is in Dublin today for discussions with the Oireachtas although we are unlikely to see any market-moving headlines.

No data of note today

GBP:

Sterling strength continued yesterday as EUR/GBP traded below the October low of 0.8720. Optimism remains that a Brexit breakthrough is imminent with reports suggesting that PM May has shown her cabinet the text of the UK proposal. We’re still no closer to a breakthrough on the Irish border / backstop however momentum is certainly in favour of the Pound for now. No data of note today while GDP and Industrial Production tomorrow morning are likely to drive markets into the weekend.

No data of note today.

USD:

A mixed week so far for the Dollar which lost ~0.5% vs. the Euro following the midterm election results. Since then we have seen a retracement as markets digest the political landscape and try to assess the possibility of a period of paralysis for US policy. To further complicate the outlook we have November’s Federal Reserve meeting later tonight; there will be no update to projections or a press conference so all eyes are looking for changes to the statement.

Initial Jobless Claims @ 13:30

FOMC Meeting @ 19:00

Author: Vincent Killeen
Tel: 1800 30 30 03 / +353 (0)1 790 0000
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7 Nov 2018

8:59 7 Nov 2018
Opening comment

EUR:

The Euro is trading higher vs. the Dollar post the US mid-terms overnight (see US piece on outcome), but also helped in part by another stronger German data release (industrial production y/y came in at 0.8% vs. 0.5% exp.), while revisions were also stronger. This alludes to Mario Draghi’s assessment in the slowdown in Eurozone momentum reversing by the end of this year. For the day ahead, focus will lie on the Italian government as tensions seemingly brew within the ruling coalition, with a confidence vote expected today on proposals to curb immigration and corruption.

Retail Sales @ 10:00am.

GBP:

Sterling continues to strengthen as market optimism surrounding a deal increases, with reports stating that PM May will be asking her cabinet to approve a Brexit deal, potentially in the next few days. This is not without increasing tensions between Dublin and the UK in regard to the backstop, but Euro/Sterling has broken support at 0.8720 as the market adopts an increasingly optimistic view on a deal getting across the line. For the day ahead it’s light on data and central bank speakers.

No data of note today.

USD:

The Dollar came under a bout of selling pressure post the mid-term elections overnight. With Democrats taking the House, it is now unlikely that President Trump will successfully impose tax cuts 2.0 and subsequently the narrative surrounding US economy’s late stage in the business cycle will increase in focus over the medium-term. For the day ahead, markets will be more concerned with the implications of US elections, which has seen US yields come off, while equities have shown resilience considering the implications. Data-wise it’s light today, with the Fed due tomorrow.

No data of note today.

 

Author: Vincent Killeen
Tel: 1800 30 30 03 / +353 (0)1 790 0000
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6 Nov 2018

8:56 6 Nov 2018
Opening comment

EUR:

The Euro is trading marginally stronger vs. the Dollar with the market adopting a ‘wait and see’ approach to the mid-term elections in the US. Yesterday, the European Commission outlined they wish to keep the pressure on Italy and see a revised budget by November 13th, although there’s been very little willingness from Rome to change their plans. On the data front, German factory orders this morning came in stronger vs. expectations (0.3% vs. -0.5% expected), while Markit Services and Composite PMI data are released later this morning.

Services, Composite PMI @ 9:00am, PPI @ 10:00am.

GBP:

Sterling continues to trade well as the vast amount of Brexit headlines circulating in the media lean optimistic, with the Times reporting that the EU is preparing to offer an ‘independent mechanism’ by which Britain could end a temporary customs arrangement with the EU, but again we await any clarification from officials The focus today will be on whether PM May’s meeting with her Cabinet can result in any noteworthy developments. Although data is firmly in the back seat for Sterling, yesterday saw a large miss in UK composite PMI numbers, (the lowest since 2016), indicating the continued decline in sentiment as Brexit uncertainty continues.

No data of note today.

USD:

US/China trade developments again remain in focus for markets and have helped buoy risk sentiment, with China’s Vice Premier Wang yesterday stating that trade talks are set to resume by the end of this week. For the day ahead it’s wait and see mode for the USD ahead of the midterms, with polling company FiveThirtyEight predicting around a 10% chance of Republicans winning both houses, while betting markets see the probability closer to 30%. We’ll see the first indicator of results with Virginia and Florida at midnight our time, while final results are expected some time around 3am.

 

No data of note today.

Author: Vincent Killeen
Tel: 1800 30 30 03 / +353 (0)1 790 0000
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