FOREX: GBP Underperforms Following Data Miss, USDMXN New Cycle Highs
Jan-17 10:03
- GBPUSD underperformance stands out on Friday, printing a daily low of 1.2161 on the back of weaker-than-expected UK retail sales. These followed yesterday's disappointing activity data and should, on the margin, underpin ongoing UK growth / fiscal concerns. However, we've noted that retail sales data are volatile and tough to read into too much - a factor potentially playing into the subsequent partial recovery for the pair back to 1.2200.
- Overall, the greenback is firmer on the session, assisted by a steady appreciation for USDJPY after the brief test below 155.00 overnight. Rising chances of a BOJ hike next week have weighed on the pair in recent sessions, and despite today’s 0.4% advance, spot remains down 1.25% on the week. Latest Nikkei sources reiterate that a majority of the BOJ policy board will favour a 25bp rate hike next week, though a final decision will be made following US President-elect Trump’s Inauguration on Monday.
- Elsewhere, EURUSD has continued to oscillate around 1.03 the figure, with a decent amount of option expiries helping to contain momentum in either direction. For reference, there is 3.98bn rolling off at today’s NY cut at 1.0300.
- Also standing out ahead of Trump’s inauguration is the strong rally for USDMXN, which remained well bid throughout the entirety of Thursday’s session and extended in early Friday trade. Spot printed a fresh cycle high in the process at 20.9382 as market participants await any details on bilateral relations, including tariffs, and mull the chances of Banxico accelerating the easing pace in early Feb.
- US Building Permits and industrial production data are the highlights of a less busy economic calendar to finish the week.
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FRANCE: No Schedule For New Gov't As Macron To Visit Mayotte
Dec-18 10:01
There is still no schedule for PM Francois Bayrou to name the parties that will form his new administration or the individuals that will sit in his Council of Ministers. Bayrou is under pressure to announce his picks as soon as possible in order to seek to kick-start the French political system out of its current stasis.
- Le Monde reports that "proposals for names were made yesterday at noon", the president of the MoDem group [Bayrou's party] in the National Assembly, Marc Fesneau, announced on TF1 on Wednesday morning. "The discussions are still very advanced", he added, considering that there is a "need for teams to be able to be formed in the ministries before Christmas..."
- Earlier, outgoing Foreign Minister Bruno Retailleau added another potential complication to the gov't formation, saying that "The conditions "are not met at the moment" for [the conservative Les Republicains] to join the government,". Without Les Republicains, the Bayrou gov't risks being just the centrist parties that formed the Ensemble alliance in the legislative election comprising 164 of the 577 deputies in the National Assembly, a very vulnerable position to be in.
- The process could be drawn out further by President Emmanuel Macron's travel schedule. Under the French constitution, the president is required to formally appoint Cabinet picks in person. With Macron set to visit the overseas department of Mayotte on 19 Dec following the devastation caused by Cyclone Chido, the timeline for appointing a gov't could be pushed to the end of the week, or beyond.
MNI: EUROZONE OCT CONSTRUCTION OUTPUT +1% M/M, +0.2% Y/Y
Dec-18 10:00
- MNI: EUROZONE OCT CONSTRUCTION OUTPUT +1% M/M, +0.2% Y/Y
MNI: EUROZONE NOV FINAL HICP -0.3% M/M, +2.2% Y/Y
Dec-18 10:00
- MNI: EUROZONE NOV FINAL HICP -0.3% M/M, +2.2% Y/Y
- EUROZONE NOV FINAL CORE HICP -0.6% M/M, +2.7% Y/Y
