Market Review – Fundamental Perspective 29 November 2017

Asian equity markets were mixed overnight after North Korea’s latest ballistic missile launch. US equities traded higher yesterday after the US tax cut plan was approved by the Senate Budget Committee, with the S&P 500 making new record highs. The 10y UST yield closed down just over 1bp as Fed Chair nominee Jerome Powell spoke at the Senate Banking Committee.
Fed Chair nominee Powell’s speech gave no significant new insights into his stance on monetary policy or regulation, commenting in the testimony that the case for a December rate hike “is coming together”.
In FX, GBP experienced a volatile session with GBPUSD taking back intra-day losses after reports that the UK and EU have reached an agreement on the Brexit bill (Telegraph). Despite the report being denied by a Government source - ‘Brexit Deal Not Done’ – GBPUSD remains above 1.3400. Focus turns now to Bank of England Governor Carney speaking at 14.00 and Deputy Governor Ramsden speaking at 14.45.
Our traders see GBPUSD resistance 1.3660 (YTD area highs) with support around the 1.3200-25 area. EURGBP support at 0.8790 and 0.8730 with resistance around the 0.8980-0.9050 area.
In data yesterday, US home prices maintain momentum in September and consumer confidence unexpectedly improved in November to 129.5, marking a 17-year high. With the current strong momentum broadly based, the report suggests that household confidence remains on a strong footing and, in our view, the buoyant consumer confidence conditions as constructive for consumer spending in Q4 and beyond.

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