Cable Crumbles as Data Fumbles

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Market Drivers January 31, 2017
Cable falls nearly 100 points as data misses
BOJ keeps monetary policy as is
Nikkei -1.69% Dax 0.25%
Oil $52/bbl
Gold $1200/oz.

Europe and Asia:
JPY BOJ keeps policy as is
GBP Mortgage Approvals 67.9K vs. 69K
EUR EU Inflation 1.8% vs. 1.6%
EUR EU Unemployment 9.6% vs. 9.8%

North America:
CAD GDP 8:30
USD Chicago PMI 9:45

Sterling fell hard in morning London dealing today after a series of UK credit reports missed their mark. The pair was down nearly 100 points off its highs dropping to a low of 1.2412 before finding a modicum of support.

A series of UK credit reports showed that UK consumers are starting to retrench. Mortgage approvals missed printing at 67.9K versus 69K. Consumer credit came in at 1.3B versus 1.7B eyed and money supply actually contracted by -0.5% versus forecasts of 0.3% rise.

UK consumers are clearly starting to feel reticent ahead of the looming Brexit vote and spike in costs due to a lower pound may also be cutting into demand for credit as confidence wavers. This week the market will get a glimpse of the latest PMI reports and if those show a deceleration of activity cable could retest its recent lows at 1.2200.

Elsewhere in Asia, markets were generally quiet for the weeklong Chinese New Year holiday, but in Japan the BOJ reaffirmed its monetary policy position maintaining the full array of policy initiatives. USD/JPY seesawed in violent reaction to the news, partly because at the same as the news was released President Trump fired the acting Attorney General for not complying with his immigration orders.

The pair them settled down for rest of Asian and European trade but remains below the 114.00 level for the time being. The volatility of the Trump White House is clearly being felt in the currency markets and so far US data has done little to assuage investors.

Today the US calendar is quiet with only Chicago PMI on the docker, but tomorrow the market will begin to receive a deluge of data including ISM Manufacturing, ADP and most importantly the FOMC statement. If the eco data surprises to the upside it should soothe the frayed nerves, but further misses on the eco front could pressure USD/JPY back to 112.50

Boris Schlossberg
Managing Director

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