The Day So Far

Despite being out of the office yesterday it appears not much has been missed and the morning has been uneventful thus far. European politics continue to draw attention and for the time being I include Britain in that mix. The headlines in the UK are littered by Theresa May’s plan for a ‘no deal’ following the release of two white papers released yesterday. Although preparation for a worst case scenario would be prudent the change in tone from the PM strikes me as a person attempting to realign the Brexit hardliners following her disastrous speech delivered in Manchester last week at the close of the Tory Party Conference. While, these domestic issues continue to take priority it comes to the detriment of making ground on the negotiation with Europe and heading into the fifth round of talks we remain at a standstill. For now more weight hasn’t been seen in Cable which has benefited from a weaker USD, but with the Fed determined to deliver their final hike in December, and with the stopwatch on Article 50 ticking down we remain bearish over the prospects for GBP over the next 3-months as the pressure to secure a transitional deal mounts.

“The ball is in their court” PM May on the 9th of October, which the European Commission replied “the ball is entirely in the UK court”.

The other main talking point is what will become of the Catalan push for its Independence as President Carles Puigdemont is due to address lawmakers in Barcelona at 5pm London time today. Events of the next 24-hours are pivotal not only for Spanish assets but the potential read across into other European assets and consequently the pace of which the ECB can act in tapering QE into 2018.

Catalan vote outcome Oct 2017

The Day Ahead…

Not much in the way of major economic data for the day ahead with neither the NFIB business optimism index or IBD/TIPPs numbers likely to the move the market. On the speaker front, uber-dove Neel Kaskari will be delivering a speech at a regional economic conference at 1500BST and while we don’t foresee him becoming the next Fed Chair it will still be interesting to hear the assessment from a more dovish leaning voter on the FOMC.

 

Anthony Cheung
Anthony is a leading market commentator with over a decade of experience accumulated as Head of Market Analysis at a leading news and analysis organisation, and now a Director of Amplify Trading.