Previous Day's Market Highlights
Sterling fell once again on Tuesday on increased fears of a vote of no confidence in PM May being called with rumours of the 48 letters being submitted required to trigger such a vote filtering through late in London trading. The pound fell to fresh 20 month lows against the dollar, falling 1.2% over the course of the day to a low of 1.2480. Sterling also fell around 0.4% against the euro.
Sterling’s fall came despite strong labour market data, showing that the market is trading the pound solely on political developments. Wages in the UK grew at their fastest pace since the financial crisis, increasing at 3.3% on a 3m/y basis while the unemployment rate held steady at 4.1%.
Elsewhere, economic sentiment figures from Germany were more upbeat than market expectations while producer prices in the US increased at 2.7% year-on-year in November, slightly above forecasts.
Away from FX, European equity markets rebounded with all major indices gaining over 1%, US equities closed slightly lower after a volatile session, with the Dow trading in a 500 point range. Finally, oil prices (Brent and WTI) gained around one percent due to a slightly weaker dollar.
|Currency Pairing||08:00 Today||Vs 08:00 Yesterday||Four-Week High||Four-Week Low||% Change|
Today's Market Highlights
A much quieter economic calendar ensures that focus for sterling traders will once again be on political developments, especially this evening's vote of no confidence in PM May after the 48 letter threshold has been breached. In the coming days, market participants will be paying close attention to the ongoing situation in the UK, especially a potential leadership contest within the Tory party.
The main macro event will be the release of US CPI inflation for November, with both headline CPI and Core CPI forecast to increase at 2.2% on a year-over-year basis. This is above the Fed’s inflation target therefore an release in line with consensus would likely increase market expectations of a rate increase at the Fed’s December meeting next week.
Other events on the calendar are of lesser significance including the latest set of Eurozone industrial production figures as well as the US budget balance, forecast to show an increase to the deficit of around 60bln USD compared to the previous month.
Once again, no central bank speakers are scheduled however market participants may begin positioning for the ECB and SNB meetings tomorrow.
Today's Economic Calendar
|10:00am||EUR||Industrial Production (m/m)||0.2%||-0.3%|
|1:30pm||USD||Core CPI (y/y)||2.2%||2.1%|