17/11/2017 - Tusk to Question May Ahead Of Summit

GBP

President of the European Council will today question British PM Theresa May on how she will meet EU conditions ahead of next month’s summit. The summit which will take place in Brussels is widely seen as an important milestone in the ongoing negotiations. This is because many business leaders will be seeking clarity on the terms of the divorce before the end of the start of the New Year, when many will begin finalising investment decisions.

As of yet, the EU has rejected calls to discuss the “future relationship”, which includes trades, arguing that sufficient progress has not been made on “separation” issues such as the size of the divorce bill.

The UK has made it clear that it wants to strike a “comprehensive” trade deal with the EU that will enable it to secure tariff-free trade with the bloc. It has also said that it does not want to replicate other countries arrangements. However a document leaked to an American based political journalism company yesterday suggested that the EU will not agree to a “bespoke” trade deal and emphasised that only a “basic” deal similar to that struck with Canada will be offered.

The leaked papers are thought to have seriously damaged Mays prospect of securing a meaningful trading relationship with the EU. In September, May stated that such an arrangement would be inferior to the current arrangements and that it would "represent such a restriction on our mutual market access that it would benefit neither of our economies".

Tusk and May will meet later this morning at Gothenburg, Sweden on the sidelines of an EU summit on social and employment matters.

USD

The dollar held steady yesterday following weaker than expected unemployment data. The U.S Labour department yesterday revealed that the number of individuals who filed for unemployment insurance for the first time during the past week rose by 10,000 to 249,000 in the week ended November 11. Analysts had originally forecast the figure to fall by 4000.

However the dollar received support later on in the session after reports that House Republicans are confident that they have secured enough votes to pass a massive rewrite of the U.S tax code. However there are still concerns that over whether the tax plan will be passed after two republican lawmakers recently expressed their concerns over the bill.

Key Announcements

09:30 - EUR; ECB President Draghi Speaks

14:30 - USD: Building Permits; Forecast at 1.25M against a previous of 1.23M