Euro/Dollar is trading a little firmer this morning, with yesterday’s Eurozone GDP numbers coming in at 1.2% vs. 1.1% expected helping sentiment somewhat. Overnight saw Parliamentary talks in Germany, which concluded in the government maintaining its disciplined approach to spending, despite calls for fiscal support from the ECB. For today we get release of final readings for October inflation (core inflation expected at 1.1%).
CPI @ 10:00am.
Weak data continues to be ignored by the Pound, with the UK currency hitting fresh six month highs vs. the Euro yesterday despite the softer retail sales (which came in at 2.7% vs. 3.4% expected). The opinion polls over the weekend will be closely watched for any further colour on the Conservatives lead, with the levels to watch on the downside in EURGBP at the year-to-date lows at 0.8470, while Cable remains capped at 1.29 for now.
No data of note today.
The Dollar trades marginally softer after comments from White House Economic Advisor, stating that the Phase One China deal was down to the “short strokes”, but “not done yet”. The focus today will be the raft of data out of the US this afternoon – with industrial production expected to come in soft given the GM UAW strike, while given the still healthy levels of consumer sentiment, retail sales is expected to remain supported (ex. auto expected at 0.4% m/m).
Empire Manufacturing, Retail Sales @ 1:30pm, Industrial Production @ 2:15pm.
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14 Nov 2019
Morning Dealer Comment
Euro/Dollar opens marginally on the front foot this morning after German GDP beat expectations, narrowly avoiding a technical recession – helped by strong private consumption. However, growth data out of China overnight was not for optimistic reading, with industrial production, retail sales and investment all weaker. Later on this morning we get Eurozone employment and GDP figures (albeit unlikely to break the period of low volatility in FX), while President Trump stated he’s to decide on auto tariffs “very soon”.
Sterling continues to trade well, with EUR/GBP eyeing up the recent lows near 0.8550 as the preparation for the UK election rumbles on in the background. Overnight saw reports in the Telegraph stating that Conservatives have offered an electoral pact to Farage, which would mean the Brexit party would only be targeting 40 seats, and naturally if we get confirmation of further concessions from Farage Sterling will likely benefit. For the day ahead we get release of retail sales – with UK data continuing to come in softer (yesterday CPI missed at 1.5% from 1.7% prior).
The Dollar continues to hold steady, with Fed Chair Powell on the wires in his testimony to Congress yesterday. The Fed Chair stated that the Fed’s policy is currently appropriate, as long as the economy stays on track. Also starting to get a bit of attention was the beginning of the impeachment process in the US, with public hearings beginning yesterday – and hearings will likely continue for the next number of weeks. The expectation currently is for a vote in Congress at the end of the year, with a vote in the Senate at the of beginning 2020.
8 Nov 2019
Morning Comment 08.11.19
The Euro remained under pressure vs. the Dollar yesterday after the European Commission lowered the euro-area growth forecasts for 2019, 2020 (seeing GDP next year at 1.2% vs. 1.4% prior, while inflation estimates lie at 1.2% for 2020). On the more positive side, comments from the European Commission President Juncker indicated he found it unlikely that President Trump would go ahead with imposing auto tariffs, with the deadline for a US decision next week. For the day ahead it’s quiet on the data front – with the support level in the Euro to watch at 1.1020.
No data of note today.
The Bank of England left rates unchanged yesterday however the big surprise was two MPC members who voted for an interest rate cut. The 7-2 vote immediately weighed on Sterling as lower global growth and signs of a weakening labour market were cited as reasons for a cut. The BoE also cut GDP and Inflation expectations for 2020 and 2021 which saw Euro/Sterling trade up to 0.8650 before settling later in the day. There is no data today but GDP and Industrial Production figures are released on Monday.
No data of note today.
It was a big day for US rates yesterday, as the more positive soundings on the US/China trade front saw US treasuries push higher by more than 10 basis points on the day, supporting the USD vs. the likes of the JPY and the EUR. FX volatility remains quite supressed when compared to other asset classes, with the likes of EUR/USD & USD/JPY vol. close to multi-year lows. For today it’s light on the data front, with just wholesale inventories and U. Mich. sentiment released in the afternoon.
Wholesale Inventories, University of Michigan Sentiment @ 3:00pm
7 Nov 2019
Morning Comment 07.11.19
The EUR failed to gather any momentum on marginally better PMI data releases yesterday combined with better factory orders out of Germany. This morning however dashed any optimistic beliefs of a German rebound, with industrial production in Germany accelerating its pace of decline (now -4.3% y/y). We also had pretty uninspiring comments from the German finance minister yesterday – who stated that Germany are able to act if there’s a crisis – but there isn’t. For today it’s relatively quiet – the European Commission are set to release their economic forecasts – while US/China trade talk headlines will continue to stir volatility.
EU release Economic Forecasts @ 10:00am.
Two points of interest for Sterling today. Firstly, the Bank of England are due at 12:00pm. There is a small risk of surprise votes for lower rates following recent dovish commentary from various MPC members (on the back of ongoing uncertainty). Focus will be on what the BoE says in its summary/minutes – and what cuts the Bank decides to make to its growth and inflation forecasts. On the election front, the Conservative party suffered a rocky start with the resignation of cabinet minister Alun Cairns, which weighed marginally on the currency.
Bank of England @ 12:00pm
Risk sentiment took a bit of a wobble yesterday after a US Administration official stated the phase one of the US/China trade deal could be delayed until December, but markets whipsaw at today’s open after comments from China’s MOFCOM – said that both sides agreed to lift tariffs in phases as the trade deal progresses. Ultimately no decision has yet been made on when the phase one trade deal should be signed – so markets remain at the mercy of headlines for now. Elsewhere in the US we had weaker productivity data yesterday which had minimal effect on the USD – with eyes turning to release of consumer confidence this afternoon.
Consumer Confidence @ 2:45pm
6 Nov 2019
Morning Comment 06.11.19
The Euro came under a spot of selling pressure vs. the Dollar yesterday as optimism surrounding the US/China deal fizzled somewhat, while US data was stronger on the margin (see US section). In Europe today we’ve the release of two key data points – services PMI and retail sales – key points underpinning the Eurozone economy over the past number of months. In other news, German Finance Minsiter Olaf Scholz was on the wires yesterday stating that Germany is ready to consider breaking the deadlock in discussions over a European banking integration plan – hinting the Germans may be willing to drop their opposition.
Services PMI @ 9:00am, Retail Sales @ 10:00am.
A strong day for Sterling yesterday with the outperformance partly attributed to the better than expected PMI data (composite PMI came in at 50 vs. 49.5), with EURGBP now eyeing up the bottom of its recent range just below 86p. Today the UK Parliament is officially dissolved for the onset of the General election campaign, with Conservatives beginning with a relatively healthy lead in the polls (see link below). Ultimately we expect the headline driven volatility associated with the election campaign to return to Sterling price action over the next number of weeks, as potential twists and turns from the campaign unravel.
No data of note today.
The USD pushed higher yesterday alongside treasury yields, with better than expected non-ISM manufacturing numbers helping the Greenback (coming in at 54.7 vs. 53.5 expected). This helped push the DXY back above its 200-day moving average, a level its found stubbornly strong support over the past number of months. Overnight we saw Republicans come under a bit of pressure – suffering setbacks in two states in off-year elections – a pro-Trump Governor in Kentucky is facing a surprise loss, while in Virginia Democrats took both houses of Legislature from Republicans – the first time this has happened in 26 Virginia in 26 years.
No data of note today.