Brexit, US ADP Employment Data in Focus

Sterling extended losses yesterday after the UK and EU failed to come to a deal over divorce terms on Monday but later corrected higher as traders awaited progress on a divorce deal. The larger than expected drop in Services PMI to 53.8 to 55.6 added to morning pressure on the pound.

Previous Day's Market Highlights

Sterling extended losses yesterday after the UK and EU failed to come to a deal over divorce terms on Monday but later corrected higher as traders awaited progress on a divorce deal. The larger than expected drop in Services PMI to 53.8 to 55.6 added to morning pressure on the pound.
 
Sterling-euro picked up from a brief dip below 1.1300 and sterling-dollar from below 1.3400. The dollar saw a bid tone, pushing back towards 1.1810 against the euro, the rate’s lowest levels since 30 November. The pound regained 1.7600 against the Aussie, 1.9500 against the kiwi, and 1.7000 against the Canadian dollar.
 
Services data also disappointed in the US, where the ISM index fell from 60.1 to 57.4, contributing to afternoon dollar weakness. The Aussie weakened overnight after Q3 GDP growth was slower than expected.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1339 1.1394 1.1092 2.65%
GBP/USD 1.3407 1.3550 1.3039 3.77%
EUR/USD 1.1823 1.961 1.1553 3.41%
GBP/AUD 1.7688 1.7910 1.6924 5.51%
GBP/NZD 1.9417 1.9836 1.8787 5.29%
GBP/CAD 1.7030 1.7468 1.6589 5.03%

Today's Market Highlights

Brexit headlines will remain a key driver of the pound as traders look for a deal by the end of the week ahead of next week’s EU Summit. A quiet UK data day will leave attention firmly on politics and data elsewhere.
 
The dollar could strengthen on a strong ADP Employment Change print (13:15). Any variations from forecasts may adjust expectations for Friday’s key NonFarm Payrolls figure. NonFarm Productivity is forecast to pick up from 3.0% to 3.3% (13:30 GMT).
 
The Bank of Canada is expected to keep interest rates on hold at 1.0% this afternoon (15:00 GMT), but upbeat comments on the economy’s strength could leave the door open for 2018 hikes and any increase in rate hike expectations would strengthen the loonie.

Today's Economic Calendar

Time Currency Release Consensus Previous
10:30 EUR EUR ECB's Mersch Speaks
13:15 USD USD ADP Employment Change (Nov) 185K 235K
13:30 USD NonFarm Productivity (Q3) 3.3% 3.0%
15:00 CAD BoC Interest Rate Decision 1.0% 1.0%
15:00 CAD BoC Rate Statement
15:30 USD EIA Crude Oil Inventories (1 Dec) -3.404M -3.429M
AUD HIA New Home Sales MoM (Oc) -6.1%
00:30 AUD Trade Balance (Oct) 1,375M 1,745M