Marknadsövervakning - 20th November 2019

Sterling has started to slip lower, as the polls, once showing the Tory Party 17 points ahead of the Labour Party, now show a 12-point lead. Yesterday’s live televised debate has been portrayed as a draw between the two political leaders. In this case, it may well be down to the US FOMC meeting minutes this evening.

The euro changed a little yesterday, even though current account figures show a consistent and healthy euro 28.2 billion surplus for September and October. SNB's Schlegel said the economic environment was very difficult – nothing new here. We look to the ECB financial stability report for further impetus today.

It is worth noting that the dollar’s interest rates generate a healthy premium against most of its currency peers, especially with rates supposedly on hold for some time. The US economy is also performing well, and US equity markets are making all-time highs. Yet, with President Trump upset with a stronger dollar and trying to influence the Fed, there are reasons for dollar sales as well as purchases.

In US trading there was news that the US and China would link the size of the tariff rollbacks to the preliminary terms of the nearly agreed May deal, which was a positive for the dollar. Whilst later in the day, the US Senate passed a bill supporting the Hong Kong protestors, which was negative for US stocks and the dollar. This has angered China and casts doubt over whether the US and China can really agree their “phase one” trade deal. We look to FOMC meeting minutes due for release this evening as a follow up to President Trump’s meeting with Fed Chair Powell.
Canadian CPI is due for release today, and we expect a monthly increase of 0.3% after last month’s 0.4% decline. This should leave the annual inflation rate around the 2.0% target rate.

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