23/11/16 - US Home Sales Surge, Autumn Statement Due

USD

The Dollar resumed its uptrend on Tuesday, helped by a surge in U.S. existing home sales last month that further cemented expectations not only of a Federal Reserve interest rate hike in December, but also of further tightening next year.

On Monday, the Dollar sold off slightly as investors took advantage of a holiday-shortened week to square positions and book profits on a U.S. currency that has logged nearly two weeks of extended gains.

In that span, the dollar index has gained nearly 5 percent on expectations U.S. President-elect Donald Trump would boost fiscal spending, in turn elevating inflation and lifting interest rates.
Data on Tuesday showed U.S. home resales rose two percent in October to an annual rate of 5.6 million units, the highest level in more than 9-1/2 years. 
 

GBP

Sterling regressed on Tuesday, with illiquid trading conditions helping the Pound reverse around half of a 1 percent rise the previous day on the view that Brexit will be slower - and softer - than had been feared. The Pound jumped on Monday after Prime Minister Theresa May pledged to address business concerns that Britain could fall off a "cliff edge" into uncertainty when it leaves the European Union, hinting at some form of a transitional agreement.

Sterling was relatively unchanged by data showing Britain ran a much smaller than expected budget deficit in October. 

The focus will now switch to today’s budget update from the British government. Chancellor of the Exchequer Philip Hammond has previously played down the chances of a major new boost for spending in the Autumn Statement.

Analysts expect some modest infrastructure spending and housing stimulus today but nothing that would radically change expectations of a weaker economy next year when difficult talks begin on the terms of Brexit.

Key Announcements

12:30 - GBP : Autumn Forecast Statement

13:30 - USD : Durable Goods Orders m/m, expected at 0.2% against a previous of 0.1%

13:30 - USD :Unemployment Claims, expected at 241 000 against a previous of 235 000

15:30 - USD : Crude Oil Inventories

19:00 - USD : FOMC Meeting Minutes