Monday, 14 November 2016 - Market Commentary
United States Dollar
The USD was given a further boost on Friday after the consumer sentiment number posted a promising 91.6 against a forecast of 87.4. The 5 month high number was a sign the American people became more upbeat about the economy days before the presidential election. With it being Veteran’s day on Friday market movement was limited and cable reached a day’s high of 1.2655, this highest since October 6th. Amid the ongoing protests of the anti-trump camp there are a few who now remain optimistic on what a trump victory can do, there is a high expectation of an increase in fiscal spending and tax cuts this will bolster economic growth. For the week ahead our attention now turns to the probability of a rate hike next month and we can expect all eyes to be on Yellens testimony on Thursday for any further signs. Today’s calendar is light but with retail sales, CPI and unemployment claims released later in the week we could be in for an eventful one.
Sterling’s recent gains have shown no signs of diminishing from Friday, with little in the way of data today the rest of the week is packed. CPI, inflation report hearings, claimant count change and retail sales to name a few. It will be interesting to see what Carneys view will be on Tuesday at the hearing, inflation is expected to soar over the coming 1-2 years and we mustn’t dismiss the small case that is Brexit. Sterling still hangs on tender hooks and can easily snap the gains we are seeing.
We expect a range today in the GBP/USD 1.2360 to 1.2610
Euro
Out of the Eurozone we have been warned by Council members Jens Weidmann and Vitor Constancio that high uncertainty is clouding growth prospects following Donald Trump’s surprise victory last week in the U.S. presidential election, combined with the looming exit of the U.K. from the European Union. Draghi reckons the European Central Bank has engineered a moderate and steady recovery in the euro area, and economists agree. So mixed messages from all angles and a tough one to call on the direction of the single currency. It recently enjoyed its safe haven drive but this has since dwindled, GBP/EUR advanced to 1.1643 last week, the highest since September. Busy week for the Euro, Financial policy makers and executives are meeting in Frankfurt for a week-long series of conferences known as Euro Finance Week. Constancio will speak at the opening of the event on Monday, with other speakers including Deutsche Bank Chief Executive Officer John Cryan before Draghi, Weidmann and German Finance Minister Wolfgang Schaeuble make appearances on Friday. On Tuesday, economic data will probably confirm that the 19-nation euro area grew 0.3 percent in the third quarter. Figures will also be released for Germany, Italy, the Netherlands and Portugal.
We expect a range today in the GBP/EUR rate of 1.1530 to 1.1660
Aussie and Kiwi Dollars
Overnight the Aussie has remained weak, this coming off the abck of the Chinese data. Chinese Industrial production coming in below the forecast as did the retail sales number. With markets remaining optimistic on the trump victory commodity prices have been hit placing pressure on the AUD. We have the release of the monetary policy meeting minutes tomorrow so this will give us an insight on the central bank’s decision to recently keep rates on hold. Elsewhere, the New Zealand dollar fell during the Asian session after a strong earthquake and aftershocks hit close to the city of Christchurch.
United States Dollar
The USD was given a further boost on Friday after the consumer sentiment number posted a promising 91.6 against a forecast of 87.4. The 5 month high number was a sign the American people became more upbeat about the economy days before the presidential election. With it being Veteran’s day on Friday market movement was limited and cable reached a day’s high of 1.2655, this highest since October 6th. Amid the ongoing protests of the anti-trump camp there are a few who now remain optimistic on what a trump victory can do, there is a high expectation of an increase in fiscal spending and tax cuts this will bolster economic growth. For the week ahead our attention now turns to the probability of a rate hike next month and we can expect all eyes to be on Yellens testimony on Thursday for any further signs. Today’s calendar is light but with retail sales, CPI and unemployment claims released later in the week we could be in for an eventful one.
Sterling’s recent gains have shown no signs of diminishing from Friday, with little in the way of data today the rest of the week is packed. CPI, inflation report hearings, claimant count change and retail sales to name a few. It will be interesting to see what Carneys view will be on Tuesday at the hearing, inflation is expected to soar over the coming 1-2 years and we mustn’t dismiss the small case that is Brexit. Sterling still hangs on tender hooks and can easily snap the gains we are seeing.
We expect a range today in the GBP/USD 1.2360 to 1.2610
Euro
Out of the Eurozone we have been warned by Council members Jens Weidmann and Vitor Constancio that high uncertainty is clouding growth prospects following Donald Trump’s surprise victory last week in the U.S. presidential election, combined with the looming exit of the U.K. from the European Union. Draghi reckons the European Central Bank has engineered a moderate and steady recovery in the euro area, and economists agree. So mixed messages from all angles and a tough one to call on the direction of the single currency. It recently enjoyed its safe haven drive but this has since dwindled, GBP/EUR advanced to 1.1643 last week, the highest since September. Busy week for the Euro, Financial policy makers and executives are meeting in Frankfurt for a week-long series of conferences known as Euro Finance Week. Constancio will speak at the opening of the event on Monday, with other speakers including Deutsche Bank Chief Executive Officer John Cryan before Draghi, Weidmann and German Finance Minister Wolfgang Schaeuble make appearances on Friday. On Tuesday, economic data will probably confirm that the 19-nation euro area grew 0.3 percent in the third quarter. Figures will also be released for Germany, Italy, the Netherlands and Portugal.
We expect a range today in the GBP/EUR rate of 1.1530 to 1.1660
Aussie and Kiwi Dollars
Overnight the Aussie has remained weak, this coming off the abck of the Chinese data. Chinese Industrial production coming in below the forecast as did the retail sales number. With markets remaining optimistic on the trump victory commodity prices have been hit placing pressure on the AUD. We have the release of the monetary policy meeting minutes tomorrow so this will give us an insight on the central bank’s decision to recently keep rates on hold. Elsewhere, the New Zealand dollar fell during the Asian session after a strong earthquake and aftershocks hit close to the city of Christchurch.
(Discuss) Busy week ahead for major pairs
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