When are the UK data releases and how could they affect GBP/USD?
The UK docket has the monthly and quarterly GDP releases today for the third quarter, alongside the trade balance and industrial production, all of which will be published later this session at 0930 GMT.
The United Kingdom GDP is expected to arrive at 0.1% m/m in September while the first readout of the Q3 GDP is seen at 0.6% q/q and 1.5% y/y.
Meanwhile, the manufacturing production, which makes up around 80% of total industrial production, is expected to show m/m growth of 0.1 % in September, up from a contraction of 0.2% recorded in August. The total industrial production is expected to come in at 0.1% m/m in Sept as compared to the previous reading of 0.2%.
On an annualized basis, the industrial production for Sept is expected to have dropped 0.5% versus 1.3% previous, while the manufacturing output is also anticipated to have dropped 0.4% in the reported month versus 1.3% last.
Separately, the UK goods trade balance will be reported at the same time and is expected to show a deficit of £11.250 billion in June vs. £11.195 billion deficit reported last.
How could affect GBP/USD?
The upbeat UK GDP figures could offer the much-needed respite the GBP bulls, but it could be a temporary relief, as the Brexit deal jitter will continue to undermine the sentiment around the pound.
Haresh Menghani, FXStreet’s Analyst notes: “From a technical perspective, the pair’s recent up-move stalled ahead of an important descending trend-line resistance, extending through monthly highs set in June, Sept. and October. A follow-through weakness below the mentioned confluence support, currently near the 1.3030 region, might negate prospects for any further near-term positive move. The slide might turn the pair vulnerable to break through the key 1.30 psychological mark and head towards testing weekly lows support near the 1.2965 level. On the flip side, the 1.3100 handle now becomes immediate strong resistance and is followed by the 1.3125-30 supply zone.”
Dollar Flat After Fed; Aussie Dollar Falls on Weak China PPI Data
The U.S. dollar was little changed on Friday after the Federal Reserve left interest rates on hold as expected. The Aussie dollar slipped after China reported weaker-than-expected China PPI release.
The U.S. dollar index was up 0.08% to 96.58 by 12:26 AM GMT (05:26 GMT). Overnight, the dollar received some support following the Fed announcement as the central bank gave an upbeat assessment of the economy and reaffirmed expectations for a December rate hike.
The Fed maintained its confidence that “economic activity has been rising at a strong rate.” GDP growth has averaged 3.3% for the first three quarters in 2018 and markets projected growth for the final three-month to be around 3%.
So far, the Fed has raised rates three times this year and is widely expected to do so again next month.
Meanwhile, the U.S. Department of Labor reported Thursday that initial jobless claims dropped by 12,000 to a seasonally adjusted 215,000 for the week ended Nov. 3, in line with economists’ estimates.
The AUD/USD pair slipped 0.2% after China reported a weaker-than-expected PPI data.
The October factory-gate inflation gauge came-in at 3.3%, compared with the expected 3.4% and down from the previous month’s reading of 3.6%
Stock Market News
Day Ahead: Top 3 Things to Watch
1. With the Fed, It’s the Little Things
If the Federal Reserve’s statement were homework, the teacher would hand it back, saying it’s almost exactly what you submitted last time.
There were, indeed, very few changes to the FOMC statement as it kept rates steady. That was reflected in the reaction of stocks, where the S&P sold off right at the release and bounced back just as fast to where it was before the decision.
But investors aren’t grading the Fed on originality. And even the smallest changes will be parsed.
In this case the chatter looks concentrated on the Fed’s new assessment of business fixed investment.
The “growth of business fixed investment has moderated from its rapid pace earlier in the year,” the Fed said in today’s statement.
That contrasted with “business fixed investment (has) grown strongly” in the September statement.
The change indicates that the Fed sees some moderating of the economy, but is content with its slow and steady rate hike pace. That’s sounds a little bearish for stocks, but the market will decide.
2. PPI, Michigan Sentiment on Tap
The market won’t get too long to dwell on Fed language before there are more numbers to digest.
The Labor Department releases its latest measure on wholesale inflation at 8:30 AM ET (13:30 GMT).
Economist predict that the producer price index (PPI) rose 0.2% in October, the same as the month before.
Core PPI, which excludes volatile food and energy prices, is forecast to have risen 0.2% last month, also the same as September’s reading.
At 10:00 AM ET, the University of Michigan will release its preliminary measure of November consumer sentiment.
On average, economists expect the index to drop down slightly to 98.
3. Disney Tops Earnings Expectations
Walt Disney (NYSE:DIS) could help the Dow tomorrow morning after handily beating Wall Street estimates on the top and bottom lines.
The company said after the bell it earned $1.48 a share on revenue of $14.31 billion.
Share rose nearly 2% in after-hours trading.
Tesla names director Denholm to replace Musk as board chair
Tesla Inc has named director Robyn Denholm as board chair, fulfilling a demand by the U.S. Securities and Exchange Commission to strip the job from Elon Musk, the electric car maker’s wayward chief executive who has dragged the company through months of turbulence.
he appointment was required as part of a September deal Tesla struck with the securities regulator to settle fraud charges against Musk and Tesla. Legal experts said it was unclear if Denholm, who has been on Tesla’s board for four years, was independent enough for Tesla to comply with the court-approved settlement.
Denholm, 55, joined Tesla as an independent director in 2014 and is the head of its audit committee. She was paid almost $5 million, mainly in stock options, by the company last year, making her the highest remunerated of its board members.
She is finance chief at Australian telecoms firm Telstra Corp Ltd and previously worked for Toyota in Australia, according to her LinkedIn profile. She will resign from Telstra to take the Tesla role full-time.
Whether she is independent enough to rein in public outbursts by Musk – who mocked the SEC as the “Shortseller Enrichment Commission” on Twitter after the fraud charge settlement – is an open question.
Denholm sat on the board when Musk set production targets for the Model 3 car that were not met, and also when the chief executive tweeted that he had secured funding to take Tesla private, which prompted the SEC to file fraud charges against him.
The court-approved settlement of those charges requires Tesla to certify in writing that it has appointed an “independent” chairman and to provide evidence and exhibits to make its case.
While the definition of “independent” is typically broad, legal experts suggested the court could ultimately conclude Tesla was not in compliance with the letter of the settlement.
“It does violate the spirit of the settlement, which was to change the culture of the board so there was a check on Musk’s worst instincts,” said Stephen Diamond, a professor of corporate governance at Santa Clara University.
The SEC declined to comment beyond the court judgment.
Canadian Bank Opens Deposit Box for Cryptocurrency Firms
A Canadian bank says its digital safety deposit box is ready for prime time.
VersaBank announced Thursday that its new VersaVault project had successfully completed beta testing. The digital-only bank plans to offer the virtual lockbox to cryptocurrency exchanges and crypto investment funds to store digital assets.
VersaBank Director of Investor Relations Wade MacBain told CoinDesk that the bank has already received over 200 inquiries about VersaVault.
In a statement, VersaBank CEO David Taylor added:
“While many are considering ideas and plans for a digital safety deposit box, we have designed and built it, and are now commercializing a first of its kind service that provides our clients with the most sophisticated security and authentication technology available globally, in which our clients enjoy absolute privacy.”
The product was first announced in January 2018, and the bank, Canada’s smallest by assets, signed on two beta users in March.
VersaBank enlisted Gurpreet Sahota, formerly the principal architect of cybersecurity at smartphone maker Blackberry, to spearhead the project back in January.
“Bitcoin and other cryptocurrencies are quickly gaining popularity and holders have already experienced their valuable holdings vanish from the less secure ‘digital storage’ options,” the bank said in a statement earlier this year.
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