The UK CBI industrial orders index declined to -40 for November from -34 previously and marginally below consensus forecasts of -39. Export orders also declined, although overall output declined at the slowest rate since September 2019. UK consumer confidence edged lower for November although October retail sales was stronger than expected with a 1.2% increase while there was a narrowing in the government borrowing requirement.
Overall confidence in the economic outlook remains fragile with unease over the services sector amid coronavirus restrictions with the UK economy also remaining dependent on services. Sterling dipped briefly following reports that Brexit trade talks had been halted due to a positive coronavirus case for one of EUs negotiating team.
The UK currency was also hampered by pressure for a correction with the less confidence tone surrounding risk appetite also acting as a drag on the currency. Sterling dipped to 1.3195 against the Dollar and 1.1155 against the Euro. Even with the impending delay in Breit talks, Markets are still on high alert for further comments.
Initial US jobless claims increased to 742,000 in the latest week from 711,000 previously and above consensus forecasts of 710,000. Continuing claims declined to 6.37mn from 6.80mn the previous week and below expectations and there was also a net decline in pandemic assistance claims for the latest week.
The Philly Fed manufacturing index declined to 26.3 for November from 32.3 in October, although this was above market expectations of 22.0. There was further strong growth in new orders, while unfilled orders increased at a faster pace. There was also a stronger pace of employment growth and prices increased at a faster pace. Companies remained optimistic over the outlook, but market concerns were focussed more on the services sector.
Existing home sales increased to an annual rate of 6.85mn for October from 6.57mn and above expectations as the housing-sector data remained extremely strong.
The dollar continued to gain an element of support in early US trading as risk appetite faded. Commodity currencies also faded and the Euro retreated to lows just below 1.1820. There was, however, a gradual reversal with the US currency retreating and the Euro strengthened to around 1.1880.
The Euro has recovered back into positive territory against the Dollar, pushing towards fresh highs around 1.1880 yesterday leaving the pair within striking distance of weekly highs around the 1.19.
The single currency has not reacted to the news that Hungary and Poland had vetoed the EU Recovery Fund and 2021-2027 Budget due to the rule of law provisions that had been attached to it reportedly threatening to withhold funds if certain democratic standards cannot be met. The focus will now be on whether the bloc can get a deal with Poland and Hungary prior to the next EU27 Leaders meeting at the EU Council Summit on December 10th.
As of writing, the Euro currently trades around the 1.1870 against its US counterpart.
Data to watch
08:00 - GBP - Retail Sales
09:15 - EUR - ECB President Lagarde Speaks
Posted in Daily Market News on Nov 20 2020