New Resident Moves into the White House Today
Today marks the beginning of a new chapter in American politics as Donald Trump is sworn in as the 45th US President. He’ll stand tall among a sea of both supporters and adversaries. However, the countdown to this day was not all that rosy. The streets of cities from Boston to Los Angeles were dotted with anti-Trump rallies and sympathy protests. Trump opponents have been angered by his comments during the campaign about women, illegal immigrants and Muslims and his pledge to scrap the Obamacare health reform and build a wall on the Mexican border. Trump is also scheduled to deliver an inaugural address at the ceremony.
In Britain, the just out data showed that UK’s retail sales dropped more than expected in December. In the Eurozone, German producer prices registered the strongest annual increase since January 2013 in December.
Pound Sterling – UK Markets
The Pound is trading on a weaker footing against the greenback and the shared currency this morning, after the just out data showed that British retail sales fell at the quickest pace in almost five years in December, amid passive consumer spending. The British calendar remains empty in terms other key economic releases today. Market participants now shift focus to next week’s key data points namely UK’s flash gross domestic product, CBI industrial trends survey and public sector borrowings data.
Yesterday, UK’s Prime Minister, Theresa May, while speaking at the World Economic Forum in Davos, announced that UK remains open for business after it officially exits the European Union. Earlier this week, Ms. May outlined her 12 point plan for the upcoming Brexit negotiation talks which clearly pointed that she was aiming for a “Hard Brexit”. Investors keenly await UK Supreme Court’s decision, which will reveal if Ms. May can use the royal prerogative or will require parliamentary approval for triggering Article 50.
US Dollar – US Markets
Today, the 45th US President, Donald Trump’s inauguration ceremony will be held in Washington D.C. Apart from this, speeches by a couple of Federal Reserve (Fed) officials are also scheduled today. Earlier in the session, the US Fed Chairwoman, Janet Yellen, had expressed some notes of caution about the US economic outlook, which had briefly brought about a broad weakness in the greenback.
Yesterday, macroeconomic data showed that the Americans filing for fresh jobless benefits unexpectedly declined last week, reflecting a historically low level. Meanwhile, the US Census Bureau reported that the country’s homebuilding activity rebounded above expectations in December, indicating that the housing market contributed positively to economic growth in the last quarter of 2016. On the flipside, the nation’s building permits, an indicator of future housing demand, edged down in the same month. Elsewhere, the Philadelphia Fed manufacturing index unexpectedly advanced at its fastest pace in more than two years in January, as new orders increased during the month.
Euro – European Markets
This morning, data from the German Federal Statistical Office indicated that the nation’s annual producer prices advanced to their highest level in almost four years in December, suggesting that inflationary pressures are building up in the Eurozone’s powerhouse economy. With no major data release scheduled later in the day, investors await services and manufacturing PMI data across the Eurozone for January, scheduled next week.
Yesterday, the ECB left its benchmark interest rate and bond-buying program unchanged, as widely expected. Following this announcement, the ECB President, Mario Draghi signalled that the time had not yet come to wind down the central bank’s unprecedented stimulus measures, leaving the Euro weaker against the Pound. He also stated that the Euro area’s core inflation continues to remain weak and that risks coming from global uncertainty could weigh on the region's fragile economic recovery and that there was still reason to continue with the stimulus measures. On the data front, the Euro zone’s current account surplus widened to an all-time high in November.
Other Currencies – Highlights
The Aussie Dollar had surged against the US Dollar earlier this morning, on the back of upbeat Chinese economic data. Data showed that in China, Australia’s trading partner, economic growth accelerated, surpassing market expectations on an annual basis in the final quarter of 2016, supported by stronger government and consumer spending. Additionally, the nation’s retail sales advanced at its quickest pace in a year in December. However, industrial output slowed during the same month. Closer home, data indicated that Australia’s new home sales bounced back in November.
During the previous session, data released by the Australian Bureau of Statistics indicated that the economy added more number of jobs than expected in December. Despite this, the national unemployment rate edged higher to 5.8%, its highest reading since January 2016, as the participation rate ticked up only slightly during the period. Further, Australia’s consumer inflation expectations for the next 12 months surged to a 3-year high level in January.