Politics Drives Pound, Dollar

Brexit progress is key today as politics continues to drive the pound and the dollar. Michael Flynn and tax are in focus in the US.

Previous Day's Market Highlights

The dollar fluctuated, falling Friday on reports that Michael Flynn would testify against Trump before later rallying on tax reform progress after the Senate passed the tax bill. Sterling-dollar fell back below 1.3500 and euro-dollar fell back below 1.1900.  
 
The Canadian dollar jumped over 1% against the pound after Friday’s data surprised to the upside. GDP increased by 0.2% in September, with growth slowing less than forecast in Q3 overall. The Unemployment Rate unexpectedly dropped to 5.9% from 6.3% as Net Change in Employment rose and the Participation Rate held steady at 65.7%.
 
Sterling rallied last week as headlines indicated the UK and EU had made progress on the divorce bill. This saw sterling at times up over 2.0% against the euro and the dollar versus the start of the week.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP / EUR 1.1341 1.1394 1.1092 2.65%
GBP / USD 1.3439 1.3550 1.3039 3.77%
EUR / USD 1.1849 1.1961 1.1553 3.41%
GBP/AUD 1.7698 1.7910 1.6924 5.51%
GBP / NZD 1.9619 1.9836 1.8787 5.29%
GBP / CAD 1.7084 1.7468 1.6589 5.03%

Today's Market Highlights

Prime Minister May is in Brussels today, the deadline for the UK’s position on the divorce bill and Irish border—formal trade talks can only begin if “sufficient” progress has been made in these areas. The pound would likely strengthen on headlines signifying that such progress has been made, while any signs of delay to the start of trade talks would likely weaken the pound.  
 
UK Construction PMI typically has the least impact of the three PMI figures and may therefore have a limited impact today barring any surprises, leaving attention on politics.
 
In the US, markets will continue to digest headlines regarding both Flynn and tax reform. The main release of the week is Friday’s jobs report, particularly the NonFarm Payrolls and Average Earnings figures, which may see dollar strength towards the end of the week.  
 
The RBA and BoC announce their latest policy decisions this week, with both central banks expected to keep interest rates on hold.

Today's Economic Calendar

Time Currency Release Consensus Previous
09:30 GBP Markit Construction PMI (Nov) 51.0 50.8
10:00 EUR Producer Price Index YoY (Oct) 2.6% 2.9%
EUR Eurogroup Meeting
15:00 USD Factory Orders MoM (Oct) 0.6% 1.4%
00:01 GBP BRC Like-For-Like Retail Sales YoY (Nov) -1%
00:30 AUD Retail Sales s.a. MoM (Oct) 0.3% 0.0%
03:30 AUD RBA Interest Rate Decision 1.5% 1.5%
03:30 AUD RBA Rate Statement