UK Budget Deficit Dips in October
Unlike yesterday, there are quite a few economic releases lined up across the globe today. The economic calendar for the US holiday-interrupted week started off on a relatively quiet note. However, today in the US, October figures for existing home sales and the Richmond Federal Reserve’s (Fed) manufacturing index is up for release.
In the UK, the just released data showed that the deficit in UK’s public sector net borrowing narrowed more than expected in October. In a few hours, UK economy watchers will get an early look of British manufacturing sentiment for November through the Confederation of British Industry (CBI) report. In the Eurozone, a flash print of the region’s consumer confidence index is scheduled later today.
Pound Sterling – UK Markets
After a quiet start this week, the British economic calendar witnessed some activity today. In a boost, ahead of tomorrow’s Autumn Statement, the just out data showed that UK’s budget deficit narrowed in October. Looking ahead, the nation’s CBI industrial trends orders index is up for release in a few hours. The indicator had plunged last month and is expected to post an improvement in the November figures.
Yesterday, Sterling started the day on a weaker note against its peers. However, it faced a dramatic shift later in the day, after the UK Prime Minister (PM), Theresa May, delivered a speech at the CBI 2016 conference and hinted that the government’s Brexit plans were beginning to take shape. The British PM reassured delegates at the conference that the government is working to avoid a “cliff’s edge” Brexit transition. These remarks provided fresh impetus to the Pound and it surged against the greenback and the Euro. She also indicated that tomorrow’s Autumn Statement will build on the Bank of England’s actions to aid the economy.
US Dollar – US Markets
The US Dollar is trading mixed against the shared currency and Pound this morning. The US economic calendar remains light today with only the Richmond Fed manufacturing index and existing home sales data. Home sales are expected to show a decline in the month of October. Moving ahead, investors look forward to the release of Federal Open Market Committee’s November monetary policy meeting minutes due tomorrow, and are anticipated to give away confirmation on the Fed’s decision to increase interest rate at its December meeting. Further, the preliminary release of durable goods order on the same day will be tracked by investors and is likely to rebound sharply in October.
Yesterday, the greenback reversed its previous session rally against the key counterparts. Macroeconomic data indicated that the US Chicago Fed national activity index improved in October from September. Further, the Fed Vice Chairman, Stanley Fischer, highlighted that fiscal policy can boost productivity and raise the nation’s economic potential.
Euro – European Markets
The shared currency is trading on a stronger footing against the US Dollar and the Pound this morning. The preliminary read of the Eurozone’s consumer confidence index is scheduled for release later in the day. The index had remained steady last month and is expected to register a slight improvement in November.
Yesterday, the Euro managed to end its 13-day losing streak against the greenback, thanks to fresh developments in 2017’s upcoming French and German elections. The domestic currency received its first good news when the German Chancellor, Angela Merkel, confirmed that she would run for a fourth term next year. Post this, Francois Fillon emerged as the surprise frontrunner in a race to choose France’s centre right Presidential candidate in next year’s elections. Separately, the European Central Bank President, Mario Draghi, in his speech to the European Parliament, indicated that the return of the Eurozone inflation rate towards the 2.0% objective still relies on the continuation of the current unprecedented level of monetary support.
Other Currencies – Highlights
The Swiss Franc has reversed its previous session gains and is trading lower against the US Dollar this morning. After a report by the State Secretariat for Economic Affairs showed that Switzerland’s trade surplus narrowed in October, as exports declined and imports advanced during the month, the Swiss Franc reversed its September drop. Looking further ahead this week, the next crucial release for Switzerland comes in the form of third quarter industrial production data.
In other economic news, Switzerland’s total as well as domestic sight deposits rose last week, suggesting the Swiss National Bank (SNB) intervened in the currency markets. The central bank had indicated that it would intervene in the foreign exchange market if the outcome of the US election triggered a rush into the safe-haven Swiss Franc. The SNB has been using negative interest rates and an unspecified amount of foreign currency interventions in an effort to weaken the domestic currency and protect the nation’s valuable exports.