IMF raising flags for a Global Slowdown followed by China's Trade Disputes

Daily Update - 22nd January 2019

Yesterday’s Market

• CNY-Gross Domestic Product

Yesterday’s Explained

Domestic Product (GDP) released by the National Bureau of Statistics of China studies the gross value of all goods and services produced by China. This indicated currently Chinese economy is slowing down due to increase in pressure over global trade disputes.

All investors have moved towards safe haven currencies due to continuing US government shutdown.

 

Today’s Market

• GBP Average Earnings
• EUR ZEW Survey

Today’s Focus

For the EUR, following a quiet start to the week, on the data front, economic data scheduled for release this morning includes January economic sentiment figures out of Germany and the Eurozone. Softer than forecasted numbers will likely weigh on the EUR, with the IMF and the Bank of Italy cutting growth forecasts at the start of the week. On Monday, the IMF cut its global growth forecasts for this year and next, with 2019 growth cut by 0.2% to 3.5% for 2019 and by 0.1% to 3.6% for 2020, the cuts coming off the back of growth forecast cuts that had been made back in October. While the U.S – China trade war was one of the key contributing factors to the downward revision, weakness in the German auto sector was also highlighted, as was weaker domestic demand in Italy.

For the Pound, economic data scheduled for release this morning includes November wage growth and unemployment rate numbers along with December’s claimant count. We will expect wage growth and claimant count numbers to have the greatest influence on the data front. Outside of the stats, Brexit continue to be the Pound’s ball and chain, with many likely to have hoped for a clear Brexit blueprint by now. Monday’s Plan B, which was unsurprisingly similar to plan A, when considering the 3 days given to British PM to run back to Brussels, left Theresa May with little wiggle room. The EU is unwilling to renegotiate and Parliament is unwilling to agree to plan A, unlikely to agree to Plan B and most likely would vote against a Plan C, unless it involves a delay to Brexit and a 2nd referendum.

Across the Pond, economic data scheduled for release is on the lighter side, limited to December existing home sales. While we can expect the Dollar to respond to the numbers, which are forecasted to be Dollar negative, focus will likely remain on Capitol Hill and the ongoing U.S government shutdown, together with any further updates on the U.S – China trade war.