UK’s Net Borrowing Hits £12.65bn in November
In a light economic calendar day, globally, the just out data released by UK’s National Statistics Office revealed that public sector net borrowing rose more than market expectations in November. In other economic news, French producer price inflation rose in November, its third consecutive monthly advance. Additionally, Italian wage inflation registered a similar rise on a monthly basis in November, compared to its previous month. Moving ahead, the Eurozone’s consumer confidence index is lined up for release in a few hours. Across the Atlantic, market participants will keep a tab on existing home sales data and MBA mortgage applications for November.
Meanwhile, investors will look forward to the UK’s GfK consumer confidence data for December scheduled for release overnight.
Pound Sterling – UK Markets
The Pound is trading on a weaker footing against the greenback and the Euro this morning, after the just out data from the UK indicated that public sector net borrowing climbed more than anticipated in November. Investors now shift attention to the nation’s consumer confidence and GDP data, scheduled ahead in the week.
Yesterday, on the economic front, the CBI’s latest monthly distributive trades survey indicated that retail sales volumes unexpectedly rose in December, registering its quickest pace of growth since September 2015, amid robust clothing sales and grocers reporting the best results since the start of this year. In addition to the recent Brexit talks, Britain’s Prime Minister (PM), Theresa May, while speaking in front of the Liaison Committee, highlighted the need for a transition period after the UK leaves the European Union (EU). She further refused to promise whether MPs will be given to vote on the final Brexit agreement reached by UK Government with the EU. Additionally, the British PM promised to reveal more details of her Brexit approach in early 2017.
US Dollar – US Markets
The US Dollar is trading higher against the Pound and lower against the Euro this morning. Market participants will keep a close eye on US MBA mortgage applications and existing home sales data due later in the day to gauge the health of the nation’s residential market. Ahead in the week, traders will keenly focus on the US GDP, durable goods orders and weekly jobless claims along with new home sales data and the consumer sentiment index for further direction in the greenback. Expectations are for the US annualised GDP to rise in the third quarter of 2016, given favourable fundamentals such as improving labour market and wage growth, while the nation’s Reuters/Michigan consumer sentiment index is expected to advance in December.
Yesterday, the greenback strengthened against the basket of six major peers, extending its previous session rally amid mounting expectations that President-elect Donald Trump’s policies would stoke growth and inflation in the US. On the data front, the seasonally adjusted Redbook index in the US recorded a rise in the week ended 16 December 2016.
Euro – European Markets
Yesterday, the shared currency almost notched its 14-year low level against its American peer, following a suspected terror attack in the powerhouse economy of the Euro zone when a truck plowed into the crowd at a main market in Berlin, killing 12 and injuring 48 Christmas revelers. The deadly incident underpinned geopolitical worries in the nation which weighed on investors’ sentiment. Elsewhere, macroeconomic data indicated that Italian current account surplus widened in October from the previous month.
The Euro is trading higher against the US Dollar this morning, paring some of its previous session losses. Earlier in the session, data showed that French producer prices advanced on a monthly basis in November. Ahead in the day, preliminary print of the Eurozone’s consumer confidence index for December will be in the spotlight. The index is anticipated to register a slight rise while remaining in negative territory during the month. Moving forward, the Eurozone’s economic bulletin along with Germany’s import price index, which is scheduled to release tomorrow, will be watched for further cues in the single currency.
Other Currencies – Highlights
The Kiwi Dollar lost ground against the greenback this morning. Overnight data showed that New Zealand’s trade deficit shrunk for a third straight month in November. In other economic news, the nation’s exports unexpectedly fell in November, led by a decline in beef, lamb and edible offal exports, while imports recorded a drop last month following a slight rise in October. The Kiwi Dollar fell below 69 US cents for a brief period for the first time since June, after the latest Global Dairy Trade auction, which showed that international milk prices dipped for the first time in more than two months.
Going ahead, market participants will focus on New Zealand’s third quarter GDP which was delayed because of powerful earthquakes last month and current account data for further trend in the Kiwi Dollar, scheduled to be released tomorrow. The nation’s GDP is expected to advance in the third quarter, while the current account deficit is anticipated to widen in the same period.