Market Review – Fundamental Perspective 12 December 2017

Global equity markets were mixed. US equities advanced after markets shrugged off a non-fatal explosion in New York but Asian gauges declined, including the Nikkei 225 which retreated from its 26-year high. Brent crude oil extended its gains above $65/brl to its highest level since 2015, likely supported by pipeline closures in the North Sea.
In FX, the USD held steady despite fairly muted trading volumes ahead of this year’s last Federal Reserve and European Central bank meeting. Most notably, NZD outperformed vs. its G10 peers rallying on the appointment of Adrian Orr as the new RBNZ Governor, given his previous role as CEO of the New Zealand Superannuation Fund.
In data yesterday, Turkey posted 11.1% y/y growth in Q3 exceeding expectations on the back of stronger-than-expected private consumption. In light of this outcome, Barclays Research raised its 2017 full-year growth forecast to 6.8% y/y but kept 2018 forecasts unchanged at 4.1% y/y. Focus now turns to the CBT meeting on Thursday.
A number of inflation prints will be in focus today. Nations reporting include Sweden, India, Poland and Romania, but the UK print will carry most significance. We expect headline CPI to remain at 3.0% y/y, in line with consensus. In the US we expect final PPI to have risen 2.9% y/y in November, also in line with consensus
GBP price action has been fairly muted ahead of today’s inflation print and the employment report (Wednesday). Our traders find GBPUSD support at 1.3300 and 1.3200, with resistance at 1.3500. Meanwhile, EURGBP finds support at 0.8690 with short-term resistance around the 200 DMA at 0.8803.

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