11 Sep 2018

Market Brief: lots of US data to watch

Kevin Musisi

Dealing team

I am going to take a moment to reflect on what has been another interesting year for currencies with Article 50 being triggered, a snap election being called and Brexit divorce bill being agreed (well, so we think). 

Today's data releases
  Key levels
    Support Resistance
13:30 US GDP
GBP/USD 1.3304 1.3550
15:00 EU consumer confidence
GBP/EUR 1.1065 1.1560
Market overview

Good morning all. Today is the second last working day before Christmas, but for me it’s the last working day of the year. As such, I am going to take a moment to reflect on what has been another interesting year for currencies with Article 50 being triggered, a snap election being called and Brexit divorce bill being agreed (well, so we think). The Pound was expected to weaken this year (according to most economists, apart from our own, who I might add bucked that trend) - however it strengthened. The USD was meant to strengthen this year, yet it weakened and the Euro was meant to struggle (amongst other things, recall the fears of contagion risk surrounding the French, Dutch, German elections at the start of the year?) Well, the Euro ended up being the best performing currency in the G10 space. If there is anything to learn from all of this, it’s that one should always expect the unexpected when it comes to currency markets.

As we approach Christmas we still can’t take our eye off the market, so worth taking a moment to run through what’s been going on. Across the pond, the US existing home sales beat expectations yesterday. Closer to home the GfK UK consumer confidence came in at a 4 year low. December’s reading disappointed, edging back to -13 from November’s -12 (consensus -12, Investec - 10), a four year low. Within this, the climate for major purchases index also edged down by one point to -4. While the level of consumer confidence is uninspiring, seasonal influences will typically put downward pressure on the index at this time of year, so we would not read too much specifically into this month’s move.

Theresa May’s year remains eventful until the end what with the UK First Secretary of State Damian Green being forced to resign yesterday. A review concluded that he had broken the ministerial code by making "inaccurate and misleading" statements about what he knew about claims of indecent material that was found on parliamentary computers in his office. Additionally, allegations of inappropriate behaviour towards journalist and Tory activist Kate Maltby were deemed "to be plausible" by the review. As a consequence, the Prime Minister asked her de facto deputy and close ally to resign from government. Green is the third minister to resign from Theresa May’s cabinet in the past two months, following those by Michael Fallon and Priti Patel. His replacement may not announced until the New Year as part of a wider cabinet reshuffle that is expected; the Prime Minister is in Poland for a two-day trip and parliament rises for its Christmas recess today.  

The day ahead

In terms of the day ahead, it’s actually going to be a busy day for US data today - we have the third estimate of US GDP, initial jobless claims and the Philadelphia Fed Business Outlook amongst a raft of US releases out at 13.30. In Europe we have the Consumer Confidence numbers out at 15.00 and in the UK we have public sector net borrowing numbers out this morning.

Thought of the day

For many this weekend is the last chance to hit the shops, battle through the crowds and get any last minute presents. Once that mission is complete, then comes the wrapping – a chore many of us struggle to get through. Regardless of your method, or if you resort to using gift bags, it’s all a distant memory after the presents have been opened, the turkey has been polished off and you settle down on the sofa to watch a Christmas movie. The Investec Dealers want to wish you and your families a fantastic Christmas and good tidings for the year ahead. 

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