Previous Day's Market Highlights
Sterling was the major mover on Thursday, climbing to a fresh 2-month high against the euro and the dollar as the dust settled after the political upheaval of the last couple of days. The pound rallied, briefly breaking above the key resistance levels of €1.14 and $1.30, as the government held cross-party talks on the best way forward for a Brexit deal, though an extension to article 50 and a second referendum were both ruled out by officials. Despite the official denials, markets are still pricing in a softer Brexit than previously thought which has underpinned sterling.
Elsewhere, the kiwi dollar, a proxy for global risk, slid as risk appetite faded. The kiwi lost around .8% across the board and neared its lowest levels against the greenback this year. Other currencies in the dollar-bloc also fell, with the loonie and Aussie both losing 0.6%.
Economic data was limited with final eurozone CPI figures as the main highlight, which showed inflation in line with forecasts at 1.6% on a year-on-year basis. As with other global inflation gauges, the 0.3% fall from last month’s figure can be put down to the fall in energy prices. Of more concern to investors is the still sluggish core CPI figure, remaining at 1% year-over-year. In the US, weekly unemployment claims marginally beat forecast while the regional Philadelphia Fed manufacturing index beat expectations, slightly allaying fears of an economic slowdown. Despite the data, the euro held steady against peers, losing only 0.1%.
In other markets, European equities ended the day with modest declines as major bourses lost on average 0.4%. Across the pond, US markets added around 0.7% on reports that the US are considering easing tariffs on China in trade negotiations. Finally, crude prices fell around 2% as continued concerns over a surge in US production further weighed on prices.
|Currency Pairing||08:00 Today||Vs 08:00 Yesterday||Four-Week High||Four-Week Low||% Change|
Today's Market Highlights
Although the ongoing cross-party Brexit talks are likely to remain the main driver of the pound, investors will have one eye on today's release of retail sales figures for December, which include the crucial Christmas trading period. Not only will these figures provide a good gauge of consumer sentiment but will also give market participants clues into the health of UK retailers. While some Brexit-related news may feed into the market, official announcements of ‘plan B’ are not expected until Monday.
Elsewhere, the release of Canadian CPI will likely cause some volatility in the loonie, especially with the Bank of Canada indicating that the timing of their rate increases is set to become more data dependent. Investors are expecting a reading of 1.7% on a year-over-year basis. With US data lacking once again owing to the government shutdown, greater focus than usual is likely to fall on the preliminary Michigan consumer sentiment figures, as market participants grapple with continued fears over the global economy.
Looking ahead to next week, Monday’s announcement of a Brexit plan B looks set to be the main influence of the pound. Also set to be released are labour market reports from the UK and Australia as well as PMI figures from the eurozone. Finally, central bank meetings come back into focus with both the BoJ and ECB set to announce their latest interest rate decisions.
Today's Economic Calendar
|9:00am||EUR||Current Account||24.1 bn||23.0 bn|
|9:30am||GBP||Retail Sales (m/m)||-0.8%||1.4%|
|3:00pm||USD||Prelim. Michigan Consumer Sentiment||97.0||98.3|