The UK General Election and the ECB Put the GBP and EUR in FocusIt’s finally election day in the UK. Can Johnson win a majority and deliver on Brexit or is there more pain to come. There’s also the ECB.
Earlier in the Day:
It was a quiet day on the Asian economic calendar in the earlier hours of this morning.
There were no material stats to provide the majors with direction early on.
The lack of stats left the markets to respond to the overnight FOMC economic projections while looking ahead to the UK General Election and the ECB monetary policy decision.
On the geopolitical front, the markets are still waiting for some clarity from the U.S and Chinese governments on where things stand. While there has been the talk of the 15th December tariffs being delayed, there has been little else from either side.
It may be a case of no news is good news if both sides are close to thrashing out a phase 1 agreement…
Later today, there’s also the UK General Election to consider, the outcome of which will influence risk sentiment.
Across the Majors
The Day Ahead:
For the EUR
It’s a relatively busy day ahead on the economic calendar. Economic data due out of the Eurozone includes October industrial production figures.
We can expect any softness in the industrial production figures to weigh on the EUR. Finalized November inflation figures out of Germany and France, however, will likely have a muted impact on the EUR.
Economic data may have to play 2nd fiddle, however. ECB President Lagarde’s first ECB press conference will garner plenty of attention and will lay the foundations of what to expect near-term.
The Eurozone’s economic powerhouse, Germany, continues to struggle, leaving the economy reliant upon services and consumer spending…
Lagarde will likely look for a shift in focus to offset the negative impact of the contracting manufacturing sector.
Fiscal support will be the likely theme, one that Draghi failed to lure from key member states.
On the geopolitical risk front, chatter on trade and UK politics will also be in focus.
At the time of writing, the EUR was up by 0.06% to $1.1137.
For the Pound
It’s not a big day for the Pound, it’s a massive day. It’s Election Day and the UK may finally be able to put the epic Brexit saga behind it.
Boris Johnson is ready to take Britain out of the EU with the deal negotiated just weeks ago…
Whether there are any jitters ahead of the first set of results remains to be seen, but some caution is likely to set in.
There’s a long way down for the Pound should Johnson come undone as his predecessors have done of late.
A Tory victory and it’s likely to be $1.35 levels and possibly more before we start to see any retreat.
There are no stats to distract the market, but expect Trump to jump in from across the Pond to share his 10 cents worth…
At the time of writing, the Pound was up by 0.09% to $1.3208.
Across the Pond
It’s a relatively busy day on the data front. Key stats include November wholesale inflation figures that are due out later this afternoon.
Expect some influence on the Dollar and U.S Treasuries, though it will likely come down to UK politics on the day. Any rising threat of a Tory loss or a hung parliament and expect Dollar support.
At the time of writing, the Dollar Spot Index was down 0.04% at 97.089.
For the Loonie
It’s yet another quiet day on the economic calendar. There are no material stats due out of Canada to provide the Loonie with direction.
We would expect the focus to be elsewhere on the day, as the markets hone in on the UK General Election.
In spite of some particularly weak numbers out of Canada of late, weakness in the Greenback and progress towards a final USMCA have supported the upside this week.
The Loonie was up by 0.05% to C$1.3167, against the U.S Dollar, at the time of writing.