The just released data showed that UK’s final GDP growth for July-September quarter was revised up from prior estimates, thus suggesting that the nation’s economy has remained robust in the aftermath of the Brexit vote. However, Britain’s current account deficit expanded in the third quarter compared to the last quarter, but came in lower than anticipated. The current account deficit now stands at 5.2% of GDP. Early today, Germany’s GfK consumer confidence index inched higher for the first month of 2017, at par with market expectations and compared to a reading of 9.8 in December.
Later today, investors will focus today on a string of economic updates from the US, which includes the Michigan consumer sentiment index and new homes sales figures.
Pound Sterling – UK Markets
The Pound has surrendered its initial losses against the US Dollar and the Euro this morning, after the final reading of UK’s GDP was upwardly revised in the third quarter, showing no signs of slowdown from the European Union membership vote. Robust consumer demand continued to help the British economy to expand steadily during the quarter. Meanwhile, on an annual basis, the British economy grew at a slower pace than initially thought in the last quarter. Separately, the nation’s current account deficit widened in the third quarter, following a downward revision to its second quarter numbers. Going by the UK’s macroeconomic picture, the PMI’s seem to suggest that businesses in the nation are now shrugging off the initial blow of the referendum vote and are strong enough to face of the Brexit turmoil.
Earlier today, Lloyds Bank's business barometer indicated that confidence among firms hit its highest level since March despite significant uncertainty over the UK’s EU relationship and the US presidential election victory of Donald Trump.
US Dollar – US Markets
Data released in the US indicated that final annualised GDP was upwardly revised in the third quarter of 2016, registering its largest increase in 2-years, on the back of stronger consumer spending. However, the nation’s durable goods orders dropped for the first time in 5 months in November, amid a sharp decline in orders for transportation equipment. Adding to the negative sentiment was jobless claims report which showed that the number of Americans filing for fresh unemployment benefits rose to a 6-month high last week. In other economic news, house price index grew at a slower pace on a monthly basis in October. Moreover, the CB leading indicator remained steady in November from October, while the Kansas City Fed manufacturing activity index in the US climbed in December.
The greenback is trading lower against the shared currency this morning. Market participants will keenly watch new home sales data and the Reuters/Michigan consumer sentiment index, scheduled to be released later today.
Euro – European Markets
This morning, the Euro gained against the US Dollar and the Pound, after market research group GfK indicated that German consumers would tend to take a more optimistic view about the economy in the first month of 2017. Germans evidently do not expect any direct impact on the nation’s economy from current global scenario for next few months. In other economic news, the final print of French GDP indicated that the economy has recovered as previously estimated in 3Q 2016, in contrast with the second quarter this year. Meanwhile, the country’s consumer spending advanced more than consensus in November. The Euro zone data calendar looks bereft with no economic releases scheduled for today with market participants awaiting the upcoming Christmas holiday weekend.
Yesterday, the shared currency ended in positive territory against the Pound and the greenback, following a hawkish ECB economic bulletin which pointed to a likely pickup in headline inflation in the common currency region early next year. On the data front, seasonally adjusted Italian retail sales rebounded on a monthly basis in October.
Other Currencies – Highlights
The Canadian Dollar has extended its downward slide against the greenback for the second consecutive session, after Canada’s annual inflation slowed more than expected in November, on lower gasoline prices and further declines in the cost of fresh fruit and vegetables. With this print, the annual inflation rate drifted further below the central bank’s inflationary target. Canada’s resource-reliant economy has struggled over the past 2 years to adapt to lower crude oil prices, resulting in a decline in business investment. Meanwhile, Canada’s retail sales increased more than expected in October, registering a rise for the third straight month, suggesting that retail sales would support nation’s economic growth in the fourth quarter. The nation’s consumer spending is expected to remain firm in the fourth quarter. Earlier in the week, data indicated that Canada’s wholesale sales rose more than expected in October.
Looking ahead, market participants will keep a close eye on Canada’s GDP data which is up for release later today.