Daily Brief

Majority report

The new MRP poll from YouGov has predicted a commanding win for the Conservative Party in the December 12th General Election, reflecting a change in this week’s narrative that had previously seen Labour narrow the gap on the Tories. Investors’ hopes of avoiding a hung Parliament and clearing up the Brexit uncertainty were addressed with the polls predicting a majority of 68 seats for the PM’s party. This spelt good news for the pound, which rose to a new 6-month high against the euro. 

While investors had been hesitant to put too much faith in polls after the surprise result in 2017’s General Election, the MRP model has been eagerly awaited. Indeed, this was the only poll that had correctly predicted that former PM Theresa May would lose her majority in 2017. 

Economic data has been scarce for GBP this week, however today’s House Price Index Headlines revealed marginally higher house price growth in November. The report stated that annual house price growth remained subdued at 0.8%, reflecting a 0.5% rise MoM. 

Not an unhappy Thanksgiving 

Heading into the Thanksgiving weekend, the US dollar has a few things to be thankful for. A revision of Q4 GDP yesterday revealed a higher-than-expected 2.1% growth in the economy, attributed to increased consumer spending. The icing on the cake for the dollar was positive weekly unemployment data, which revealed jobless claims falling to 213,000 – down 15,000 WoW. 

This positive data kept the dollar on top of the euro for this week, only losing out the pound as a result of such strong political data out of the UK. Despite there appearing no end in sight to the ongoing Sino-US trade war, and added tension on the back of President Trump’s backing of Hong Kong protesters, the dollar is in relatively good stead with investors as the country enters it’s national holiday.

(Almost) the turkey of the group

Positive news for the pound meant a downward slide for the euro, while the single currency also fell against the US dollar on the back of yesterday’s better-than-expected US economic data. 

Today sees the release of preliminary German Consumer Price Index (CPI), which is forecast to drop 0.6% in November MoM. Investors are also keeping a close eye on data from elsewhere in euroland, including Spanish Flash CPI, Italian 10y Bond Auction and YoY Private Loans data. 

All of this follows yesterday’s statement by Benoît Cœuré, executive board member of the ECB that a central bank digital currency (CBDC) could “ensure that citizens remain able to use central bank money even if electronic payments become even more popular”.

Data down under expectations

While the picture yesterday indicated there might be some salvation for the Australian dollar, today’s data had another thought in mind. An unexpected contraction in private capital expenditure for Q3 added significant pressure to the Aussie against the NZ dollar, as did a revision of Q2 data that revealed a larger-than-expected contraction. 

The boost AUD/NZD enjoyed yesterday following RBA Governor Philip Lowe’s dismissal of quantitative easing (QE) appears to be short-lived, as negative AUD data has been met with positive news out of New Zealand. Business confidence has rebounded in November, with ANZ chief economist Sharon Zollner stating that “the vibe is changing”.   

This had made a tough week all the tougher for the Aussie, losing out to the pound, dollar and euro as well as its Kiwi counterpart.