HomeContributorsFundamental AnalysisThe UK, November Inflation Data Is Due To Be Released Today

The UK, November Inflation Data Is Due To Be Released Today

Market movers today

In the UK, November inflation data is due to be released today. Headline inflation surged to 3.0% in October, but with the GBP depreciation pace abating there is a good chance that the November print will mark the start of a deceleration in inflationary pressures and we estimate core inflation remained stable at 2.7%.

German ZEW expectations for December are also due out this morning. Consensus is for a small decline from the current level of 18.7, due possibly to the recent heightened political uncertainty about the German government formation process.

In Sweden, focus is on the November inflation print , which we estimate will have been boosted by soaring energy prices (see next page).

Selected market news

Brent oil has risen 1.28% and is currently trading at 65.52 dollar per barrel, the highest since 2015, as the Ineos’s North Sea Forties oil pipeline has been closed due to a crack. According to reports, it should take around two weeks to fix the pipeline. The higher oil price is likely to push up headline inflation globally near term but we still believe underlying inflation pressure will stay fairly muted, as we do not believe wage growth will pick up significantly next year.

In China, WSJ writes that officials are worried about investors pulling money out of China due to a combination of US tax reform and US rate hikes. According to the story, contingency plans are in place, with the PBOC ready to raise interbank rates, the possibility of tighter capital control and FX interventions.

With respect to Brexit, UK trade secretary Liam Fox has said that the UK wants a ‘virt ually identical’ trade deal with the EU to the one it has now and dismissed the EU’s chief negotiator Michel Barnier’s comments that something like the EU’s free trade arrangement with Canada (CETA) was the best the UK could hope for, as the UK wants to leave both the single market and the customs union. The comments underline that it is still difficult to say what the UK really wants to get out of the upcoming discussions on the future relationship and thus it is too early for markets to price out the Brexit risk premium in GBP.

In the US, Republicans still hope to hold a final vote on tax reform in both the House and the Senate next week so that President Trump can sign it on 20 December or even sooner. However, according to POLITICO, House and Senate Republicans are not getting closer to finding a compromise. While most of the negotiations are behind closed doors, a public hearing in the conference committee (consisting of both House and Senate members) is scheduled for Wednesday.

Danske Bank
Danske Bankhttp://www.danskebank.com/danskeresearch
This publication has been prepared by Danske Markets for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Markets´ research analysts are not permitted to invest in securities under coverage in their research sector. This publication is not intended for private customers in the UK or any person in the US. Danske Markets is a division of Danske Bank A/S, which is regulated by FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange. Copyright (©) Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.

Featured Analysis

Learn Forex Trading