STIR: Fresh Dovish Developments Likely Pre-Requisite For Dovish GBP Extension

ECB President Lagarde is speaking to Martin Wolf of the FT. The topic of the discussion is "What are the futures of the euro and the dollar as global currencies, and what are the opportunities for the digital euro?"

Initial headlines give an early insight into the December macroeconomic projections, set to be released next Thursday:

• "*LAGARDE: GROWTH PROJECTIONS ARE LIKELY TO BE REVISED HIGHER" Bloomberg
• "ECB'S LAGARDE: WE REMAIN IN A GOOD PLACE" - Reuters

Asked about French President Macron's suggestion for the ECB to add growth and employment considerations into its mandate (alongside suggestions that policy can be "significantly adjusted today"), she suggests focus should remain on enhancing the single market. 

You can stream the event here

Reeves asked if headroom was lower by e.g. GBP5bln or GBP10bln in the Spring, would that be enough to mean more fiscal measures need to be taken in the Spring?
She avoids the question and then when pushed to ask says "I reserve the right to be able to take action at any point. But I believe the headroom that we have and the changes that we've made means that I won't need to do that in the spring. But of course, I reserve the right at any time to take action."

A quick 0.3% pullback in US equity futures is noted, but Emini is already moving away from those session lows. There wasn't an obvious headline trigger for the move, and weak volumes behind the selloff supports the view that it wasn't news-related (see chart).

Our technical analyst notes that initial support in Eminis is 6807.02, the 20-day EMA. A bull cycle remains intact.

FIgure 1: ESA Index Price and Volume (Source Bloomberg Finance L.P)

Separately, the WSJ reports that "U.S. manufacturers are pulling back harder on orders of parts and raw materials because of rising uncertainty around the future of the Trump administration's signature tariffs, a new survey shows".