Today's data releases
 Key levels
11:50UK BoE's Kohn speaks SupportResistance
12:00US MBA Mortgage ApplicationsGBP/USD1.30301.3340
Market overview

Overnight headlines focused on Trump’s address at the National Assembly in South Korea. The President said that North Korea’s Kim has turned the nation into “a hell that no person deserves” and called for more help from Russia and China, noting “…to those nations that choose to ignore this threat…the weight of this crisis is on your conscience”. Trump is scheduled to visit China next where he is due to have a private dinner with President Xi. Equity and currency markets overnight have largely ignored Trump’s comments and believe it or not President Trump has made it through his first year; today marks the one year anniversary since the US election on November 8th 2016. He has yet to pass a meaningful policy change so the pressure is now on him and the Republicans to get their latest tax reform bill through; watch this space, we could hear further headlines on the senate bill in the coming days.

Moving on to Europe, we had some commentary from the European Central Bank board members yesterday. President Draghi spoke on banks and bad debts and noted that European banking supervision “has been instrumental in building a stronger banking sector” and while non-performing loan levels have been coming down, from 7.5% of loans in early 2015 to 5.5% now, “the problem is not yet solved”. Prior to this ECB’s Lautenschlaeger said that she was very confident that inflation will pick up in the medium term. She also said that she would like a clear exit from QE.

Closer to home, PM Theresa May is considering whether to fire a member of her cabinet only seven days after her defence secretary quit in a sexual harassment scandal, as the U.K. government faces fresh turmoil in the middle of Brexit talks. May is likely to dismiss her International Development Secretary Priti Patel in a row over a succession of unauthorised meetings she held with Israeli officials behind the prime minister’s back, according to reports from the BBC, which the U.K. government declined to deny.

The day ahead

We have a quiet calendar ahead. This morning we are due to hear from Germany’s Merkel BoE’s Kohn. In the afternoon we have the US mortgage applications. Markets will be keeping an eye on any further US tax developments along with headlines from Trump’s Asia trip.

Thought of the day

What a year it has been for Donald Trump! From withdrawing from the Paris Climate Agreement, banning the arrival of people from 7 Muslim majority countries; sacking Anthony Scaramucci in 10 days; inventing the word ‘covfefe’ and threatening to destroy North Korea numerous times, Trump’s first year in office has been… interesting! However no one can deny that the US economy is in a better place. Record highs on the Dow Jones, Nasdaq and S&P 500, unemployment hitting the lowest level in 17 years and 1.5m new jobs created since he took office. The US Dollar Index (DXY) however, has weakened over his term from 98.5 when he took office to 94.83 today, although it is now starting to recover. With the Federal Reserve expected to raise interest rates again next month and the new FED chair revealed will we see the DXY continue its appreciation? To discuss USD forecasts for 2018, please give your Investec Dealer a call on 0800 055 6339.

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