The U.S. has declined to explicitly label China as a currency manipulator, however, its clear that the current U.S. administration will be keeping a watchful eye over Beijing's currency policies. People's Bank of China Governor Yi Gang pledge to "continue to let the market play a decisive role in the formation of the RMB exchange rate" during the IMF conference last weekend helped to defuse doubts surrounding currency manipulation, as expectations grow for the Chinese yuan to depreciate towards its psychological 7 level against the dollar.
UK, US and Europe: Tensions with Saudi Arabia continue as Goldman CEO announces that executive Dina Powell will not be attending the Saudi investment conference 'Davos of the Desert'. The mass cancellations taints the Saudi's attempt of economic reform as Donald Trump says it appears Khashoggi is dead, warning that the repercussions could be 'severe'. Regarding oil prices, Saudi's strained relationship with the U.S. could counteract the increasing supply of crude oil in the U.S.
Looking ahead, there are precious few major releases to keep an eye out for, with UK public sector net borrowing alongside Canadian retail sales and inflation providing the only things worth keeping an eye out for. With the EU seemingly rebuffing the Italian budget, and a growing risk that further evidence is presented in the Khashoggi case, there are still plenty of reasons to expect volatility today.
In Puerto Rico the U.S. has already spent $3 billion to put an end to the longest blackout in its history. The effort to restore the power grids in Puerto Rico come amongst concerns on hurricane season in the U.S. This follows on from our piece on Tuesday about the economic impact of hurricane season.
Economic calendar - key events and forecast (times in BST)
Source: Daily FX Economic Calendar
9:30am - UK Government borrowing figures out later today.
1.30pm – Canada CPI, retail sales (September): CPI to be -0.1% MoM, in line with August, and 2.6% YoY from 2.8%, and core CPI to be 1.6% YoY from 1.7%. Market to watch: CAD crosses
3pm – US existing home sales (September): forecast to drop 0.3% MoM. Market to watch: USD crosses
Corporate News, Upgrades and Downgrades
Provident Financial has seen weaker performance in its home credit unit, which has seen activity 10% below historic levels. The Vanquis bank division saw ‘good growth’ in the third quarter. Pendragon has issued a profit warning, saying underlying pre-tax profit for the year is expected to be £50 million lower than the £60.4 million of a year earlier. London Stock Exchange said that Q3 revenue was up 5% to £522 million, while total income rose 8%, and that it has acquired a further 15.1% in clearing house group LCH. Uber announce plans to launch a short-term staffing business 'Uber Works', to build on its current offering ahead of the IPO planned for next year. Interesting to see market sentiment on upcoming IPOs considering the initial pricing failures we have seen recently from IBs when it came to Aston Martin and the Funding Circle floating on the stock exchange. Lookout for Intu today as the shopping centre owner has announced the company has received a takeover offer from a consortium offering 205p per share. Byggmax upgraded to buy at SEB Equities
EDP upgraded to outperform at Macquarie
Galp upgraded to outperform at RBC
Leifheit upgraded to hold at Berenberg
Beiersdorf downgraded to hold at Bankhaus Lampe
Casino downgraded to hold at HSBC
Danske Bank cut to equal-weight at Barclays
EasyJet downgraded to underperform at MainFirst
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