Risk appetite remained firm ahead of Wednesday’s US-China trade-deal signing.

Risk appetite remained firm ahead of Wednesday’s US-China trade-deal signing.

Global equities, however, stalled given the amount of favourable news priced in and edged lower on Wednesday as caution increased.

The dollar registered slight losses as global growth hopes and expected reserve diversification underpinned the Euro.

Sterling secured a tentative corrective recovery with GBP/USD back above 1.3000. The Swiss franc strengthened as US warnings over currency manipulation curbed expectations of National Bank action to weaken the currency.

Precious metals recovered slightly as equities registered a limited decline. Over-supply fears continued to limit support for oil prices.

US Treasury Secretary Mnuchin stated that there would be no further reduction in existing US-China tariffs in the short term and sources suggested no cut was likely until after the 2020 US Presidential election. The comments triggered some disappointment given the stresses caused by existing tariffs and halted yen selling. USD/JPY consolidated around 110.00 and retreated marginally on Wednesday with markets wary over any surprises surrounding the scheduled trade-deal signing.

UK Prime Minister Johnson stated that it was very likely that the UK would secure a comprehensive trade deal with the EU by year-end. He also reiterated that he would not grant a second Scottish Independence referendum.

Sterling sentiment remained fragile initially amid on-going speculation that the Bank of England would move to cut interest rates, although there was a slight scaling back of expectations of a January cut which protected Sterling. Slightly increased confidence in the global economy also provided an element of support and there was a correction from recent losses.

GBP/USD edged back above 1.3000 while GBP/EUR got above 1.1700. The latest inflation data will be watched closely on Wednesday as a subdued reading would make it easier for the central bank to cut interest rates. Sterling secured slight gains in early Europe with an element of short covering and GBP/USD held above 1.3000 ahead of further rhetoric from Bank of England officials.

Economic Calendar

09:30GBP Core CPI (Y/Y)(DEC, 2019)1.70%1.70%
09:30GBP CPI (M/M)(DEC, 2019)0.20%0.20%
09:30GBP CPI (Y/Y)(DEC, 2019)1.40%1.50%
09:30GBP PPI Input (Y/Y)(DEC, 2019)-2.50%-2.70%
09:30GBP PPI Input (M/M)(DEC, 2019)0.10%-0.30%
09:30GBP PPI Output (Y/Y)(DEC, 2019)0.80%0.50%
10:00Euro-Zone Industrial Production (Y/Y)(NOV, 2019)-2.30%-2.20%
10:00Euro-Zone Industrial Production (M/M)(NOV, 2019)-0.50%-0.50%
10:00Euro-Zone Trade Balance(NOV, 2019)17.0B28.0B
13:30USD PPI Ex Food & Energy (Y/Y)(DEC, 2019)1.40%1.30%
13:30USD PPI Ex Food & Energy (M/M)(DEC, 2019)0.20%-0.20%
13:30USD PPI (M/M)(DEC, 2019)0.20%0.00%
13:30USD PPI (Y/Y)(DEC, 2019)1.30%1.10%
21:45NZD Electronic Card Retail Sales (M/M)(DEC 01, 2019)-2.60%
21:45NZD Electronic Card Retail Sales (Y/Y)(DEC 01, 2019)-5.10%
23:50JPY Machinery Orders (Y/Y)(NOV, 2019)-1.80%-6.10%

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.