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November

Euro suffers from more poor data

Published: Friday 23 November 2018

  • Sterling holding up despite the ‘B’ word
  • US Dollar stronger on oil weakness
​​By David Johnson
 
So this proposed Brexit deal is either within grasp, or grasping at straws, or the Prime Minister has lost her grip on reality, or the Italians will hold the EU within their grip when they meet to discuss the deal, or Spain wants to get a grip on Gibraltar, or I have no grasp of what is going on, or perhaps we just need to get a grip and move on..! I am not quite sure if any of that is true, but it is moving the Pound around like a bucking bronco. It starts Friday stronger against the Euro - more about the Euro’s problems below – but lower against the US Dollar.
 
Brexit debate moving markets left, right and centre
 
This whole debate is also moving share prices around. That is enhanced by the German Finance Minister’s warning that Brexit will savage EU growth, but the real crux of his comments was the fact that the UK contribution will be seriously missed. That was quite an admission. The Euro is also under pressure after German Gross Domestic Product (GDP) growth remained at a very subdued 1.1% on the year. So, despite all the lauding of Germany’s resilience, their economy is still growing at a slower pace than the US and the UK.
 
Euro coming under pressure
 
We have also had French and German Purchasing Managers’ Indices (PMIs) this morning, all of which were a step down from last month; and mostly below expectations. We will see Eurozone manufacturing and service sector PMIs later this morning and there is a good chance they will fall short of expectations, too, so the Euro may come under pressure.
 
The afternoon starts with Canadian retail sales and inflation data. The forecasts are slightly weaker than last month’s, so the Looney (what we affectionately call the Canadian Dollar) is likely to suffer.
 
Thanksgiving follow up could affect market volatility
 
I mentioned above that the Pound is weaker against the US Dollar, but that has more to do with the USD strength. A big drop in US Oil Inventories has combined with other factors to drop the price of crude oil. Have you seen that at the pumps yet? Of course you haven’t. By contrast with the EU, the US PMI indices are expected to be marginally stronger than last month. So, as long as the US service and manufacturer indices are better than last month, the USD is likely to strengthen before the close of business in London. Beware, though, that, following Thanksgiving Day, today is a half day at best and a write off at worst in the US. That lack of traders could impact the market volatility.
 
En garde!
 
And it isn’t just the UK that is suffering at the hands of hoodies with weapons. A jewellers in Mississauga, Ontario, came under attack when robbers armed with a gun and a hammer and other weapons smashed the glass and tried to enter the store. Quick thinking employees retrieved swords which were ‘gifts from a friend’ and used them to repel the intruders. The crook with the gun tried to shoot into the store but the weapon jammed and the four would-be thieves scarpered back to their car. Challenging those store owners to a duel is probably not a good plan. 
Unfair
 
Superman wears his pants over his tights and that is fine, but when I do it, I am apparently a weird, creepy bloke and I can’t shop in Waitrose anymore.

Today's Major Economic Releases

Market BST Data/Event Previous Expected
EUR 09:00 EU: Flash Manufacturing Purchasing Managers' Index 52.0 52.0
EUR 09:00 EU: Flash Services Purchasing Managers' Index 53.7 53.6
CAD 13:30 Canada: Consumer Price Index -0.4% 0.1%
CAD 13:30 Canada: Core Consumer Price Index 0.0% 0.0%
CAD 13:30 Canada: Retail Sales -0.1% 0.1%
CAD 13:30 Canada: Core Retail Sales -0.4% 0.3%
USD 14:45 US: Flash Manufacturing Purchasing Managers' Index 55.7 55.8
USD 14:45 US: Flash Services Purchasing Managers' Index 54.8 55.0

For more information, infographics and the latest currency insights, visit www.halofinancial.com/news