Headlines
•
No fresh UK reports –
Sterling fluctuates on overseas data.
•
GBP/EUR close to three-month high –
ECB’s Draghi talks up stimulus prospects.
•
‘Cable’ spikes at 10-day high –
On soft US retail data.
• Paris attacks could weaken risk sentiment –
Commodity currencies could depreciate.
Sterling
There were no key domestic ecostats released on Friday and subsequently the Pound fluctuated in response to data from abroad or followed longer-term trade patterns.
The full extent of the tragic terrorist attacks that took place in Paris on Friday evening hit newswires after markets had already closed for the weekend so the devastating news did not have much of an impact on currencies. However, anxiety in the aftermath of the brutal attacks could lead to a period of risk aversion as traders digest the implications going forward.
Euro
The Pound to Euro exchange rate appreciated slightly on Friday in reaction to a worse-than-anticipated Eurozone GDP report, which saw economic output decelerate from 0.4% to 0.3% unexpectedly in the third quarter. Sterling rose close to a new three-month high but failed to reach the level struck midway though August.
Slovakia and Spain boasted the fastest growth rates of 0.9% and 0.8%, respectively, but steep contractions of -0.6% in Finland and -0.5% in Greece weighed on the currency bloc’s overall figure. The continent’s largest two economies, Germany and France, both witnessed subdued growth of 0.3%.
This morning’s economic reports are expected to confirm that consumer prices stagnated at 0.0% during October but that price pressures minus the impact of food and fuel price fluctuations rose by around 1%. The data is unlikely to alter European Central Bank stimulus projections, which point towards further monetary loosening in December. The anxiety surrounding the Paris attacks is also likely to keep up the pressure on ECB policymakers to unleash further stimulus in the near future.
US Dollar
Sterling rose in value against the US Dollar on Friday afternoon as markets reacted to a disappointing US retail sales report.
‘Cable’ spiked at a 10-day high when US retail sales came in at just 0.1% for October. The figure was three times lower than analysts had expected and was accompanied by a downgrade to September’s score to 0.0%. The US Commerce Department said that a surprise decline in automobile sales was behind the slowdown in consumer spending.
But demand for the ‘Greenback’ was not damaged heavily by the slowdown in retail spending because a separate report showed that consumer confidence rose from 90.0 to 93.1 in November.
Canadian Dollar
The Pound rallied by around half a cent against the Canadian Dollar on Friday as the bearish oil market continued to weigh on demand for the commodity-sensitive ‘Loonie’.
Oil prices fell further over the weekend as the deadly Paris attacks stoked fears of further slowdowns in financial markets. However, the Canadian Dollar appreciated when trading desks reopened in Asia on Monday morning in reaction to comments from Canadian finance minister Bill Morneau suggesting that the new Liberal government has no intention of intervening in the currency markets.
Australian Dollar
The Pound to Australian Dollar exchange rate remained relatively flat on Friday but with risk aversion trends likely to grip markets this week there is potential for Sterling to strengthen versus the Antipodean currency over the next few days.
New Zealand Dollar
A decent New Zealand retail sales print helped drive the ‘Kiwi’ Dollar higher against the Pound when markets reopened for this week’s session earlier this morning. The report showed that retail sales volumes increased by 1.6% in the third quarter, up from 0.0% in Q2. However, analysts expect demand for the risk-sensitive New Zealand Dollar to decrease this week due to concerns related to the terrorist attacks in Paris.
Data Released Today
10:00 EUR Euro-Zone Consumer Price Index (YoY) (OCT F) Medium 0.0%
10:00 EUR Euro-Zone Consumer Price Index – Core (YoY) (OCT F) Medium 1.0%