Sterling
The High Court ruling in favour of a challenge to the use of Royal Prerogative to trigger Article 50 continued to boost Pound Sterling on Friday. Markets were in a state of panic regarding the likelihood of Donald Trump winning the US election, causing a flurry of demand for safe government assets. UK gilts performed particularly well and the sudden demand for debt sent Pound exchange rates higher as overseas investors converted their cash in order to lend it to the government.
There is nothing left on the UK data calendar for release today. Tomorrow sees the publication of industrial and manufacturing production figures, as well as the NIESR GDP estimate for October.
Euro
The Euro was also supported on Friday by the strong demand for government bonds. This could create problems for the ECB, as falling yields threaten to make even more treasuries unsuitable for its massive quantitative easing programme. A run of poor composite and services PMIs for France, Italy, Spain and the Eurozone as a whole failed to weigh particularly on the common currency.
Of the upcoming data slew today the Eurozone retail sales and Sentix investor confidence index will be of particular interest. A speech by the ECB’s Sabine Lautenschläger could move the Euro if she comments on monetary policy, in particular QE.
US Dollar
Investors withdrew from the US Dollar, stocks and risky assets on Friday as markets faced up to the reality that Donald Trump may win the imminent US election. News of the reopened FBI investigation into Hillary Clinton continued to keep the Democrat’s lead in a polls subdued. Over the weekend, however, the FBI reconfirmed that it would not be bringing criminal charges against Hillary Clinton. This may have caused a market recovery, but Clinton’s lead in the polls has failed to bounce back to the levels seen before the FBI announcement.
With less than 48 hours to go before the next President of the United States is announced, investors are likely to have little time for economic data during the next few days.
Canadian Dollar
The oil market crashed yesterday after Saudi Arabia threw a huge spanner in the works of the expected OPEC production cut. Iran, having only just returned to full capacity after output sanctions were lifted, had previously demanded to be exempt from the terms of any coordinated production cut. However, frustration at the country’s unwillingness to cooperate saw Saudi Arabia threatening to raise its oil production to drive prices even lower if Iran does not comply. After trading near US$52 per
barrel in October – a yearly high – WTI crude extended its slump to trend just above US$44.
There is no Canadian data set for release today, but the ‘Loonie’ is currently enjoying a bullish rise as confidence of a favourable outcome from the US election has inspired markets to chase after yield today.
Australian Dollar
Australian data was positive on Friday, but the strong anti-risk appetite gripping the markets saw the Australian Dollar fall. Retail sales grew above forecast and the Reserve Bank of Australia’s (RBA) latest Statement on Monetary Policy declared that the mining bust was over. Regardless, markets remained bearish on the ‘Aussie’.
There is plenty of data that could affect the Australian Dollar on the calendar tomorrow, including Chinese trade figures as well as the domestic NAB business confidence index and Westpac consumer confidence scores. However, with markets focussed on the US election, the potential impact of these figures is likely to be muted.
New Zealand Dollar
Just as with the Australian and Canadian Dollars, the New Zealand Dollar was faced with little demand on Friday. The markets were firmly bearish on commodity assets, causing the ‘Kiwi’ to slump.
Any data due from New Zealand is likely to be ignored this week due to two high impact events; the US election and the latest Reserve Bank of New Zealand (RBNZ) policy meeting, in which policymakers are expected to cut interest rates to a fresh low of 1.75%.
Data Released
November 7th 09.30 EUR Eurozone Sentix Investor Confidence (NOV) 9.0
November 8th 00.30 AUD NAB Business Confidence (OCT)
November 8th 07.00 US Election – Polls Open
November 8th 09.30 GBP Industrial Production (YoY) (SEP) 0.8%
November 8th 13.30 CAD Building Permits (MoM) (SEP)
November 9th 20.00 NZD Reserve Bank of New Zealand Rate Decision (NOV 10) 1.75%