Waiting for G20

3 minute read

USD

A range of only half a cent separated the USD's high against the EUR from its low on Thursday. The two were precisely unchanged on the day against one another. The USD did not get much help from the US economic data. Personal income and spending both exceeded forecast, with a 0.6% rise in spending beating the 0.5% increase in income. Core personal consumption expenditure, an important guide to inflation, went up by 1.8% in the year to October, having risen by a downwardly-revised 1.9% in the year to September. The slowdown in PCE supported the idea that the Fed might be dialling down its tightening of monetary policy, as did the gentler tone of the Federal Open Market Committee minutes. On the trade front, Trump spoke again about taxing auto imports but it was unclear whether or not it was simply a negotiating tactic ahead of the G20 summit.

EUR

German inflation came in lower than expected, down from 2.4% to a provisional 2.2% in November. This morning's consumer price index data for the euro zone as a whole mirrored that change: Headline inflation slowed from 2.2% to 2.0% while the core measure, which ignores food and energy prices, was down from 1.1% to 1.0%. Euroland unemployment failed to tick lower, as analysts had predicted, and was unchanged at 8.1%. German retail sales fell by 0.3% in October, a worse result than expected, but beat forecast on an annual basis, rising by 5.0%.  

CAD

Other than reporting a narrower current account deficit, down from C$16.7 to C$10.3bn, the Canadian statisticians had nothing to say on Thursday. It was not enough to prevent  a 0.2% erosion of the CAD's value against the USD. Nor did a 2.4% increase in oil prices do it any good. Investors are wary of commodity-related currencies ahead of the G20 summit, which takes place in Buenos Aires this weekend, and unsure what surprises the US president might spring on his USMCA partners, Mexico and Canada.

GBP

It was more of the same for sterling as investors continued to fret about the prime minister's Brexit legislation, which goes to a vote in the House of Commons on December 11. Their mood was not improved by the lingering angst following the Bank of England's apocalyptic economic assessment of the no-deal Brexit which still remains a possibility. The only UK ecostat was this morning's house price index from the mortgage lender Nationwide. It showed prices rising by 0.3% in November, up by 1.9% from a year ago. The GBP was not seriously wounded though; it went down by just 0.1% against the USD.

JPY

A return to form by the JPY saw it fall 0.2% against the USD. The move was driven more by sentiment than by the economic data, though there were plenty of them for investors to ponder. Tokyo consumer prices went up by 0.8% in the last 12 months. Unemployment ticked up to 2.4%. A 2.9% monthly rise in industrial production put it 4.2% ahead of the same month last year. Consumer confidence was almost unchanged at 42.9 according to the Cabinet Office. Investors could find nothing among the numbers to inspire them in either direction.

 
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