30/11/2018 - US Hike In December

USD

The Dollar lost ground yesterday despite the Federal Reserve teeing up a December interest rate hike at their most recent meeting after officials cited how trade tensions and corporate debt could impact growth.

Minutes released on Thursday from the November meeting of the Federal Open Market Committee pointed towards the strong likelihood of another quarter-point increase next month and three more hikes in 2019.

At the meeting the two items most frequently mentioned were tariffs and debt. The U.S. and China have been engaged in a volley of tariffs this year, while corporations, notably those with weaker balance sheets and lower credit ratings, continue to load up on debt which is raising concern.

GBP

The pound fell towards a two-week low on Thursday amid growing concerns about the UK parliament’s vote on Brexit and after the Bank of England warned of risks to the currency if Britain leaves the European Union in a disorderly manner. Barely four months before Britain is due to leave the EU; Prime Minister Theresa May is struggling to gather support from parliament for the agreement she sealed with EU leaders. Parliament is due to vote on the deal on Dec. 11.

The possibility of a no-deal Brexit sent the pound to a two-week low earlier this week before it retraced some losses and currency analysts say a recovery is unlikely before the parliamentary vote, which will be a key risk event. Adding to the gloomy sentiment, the Bank of England warned on Wednesday that Britain risks a bigger hit to its economy than in the financial crisis if it crashes out of the EU without a deal. It said the pound could then lose a quarter of its value.

Key Announcements

All Day: G20 Meetings