- USD continues to hold onto its gains
- Fillon and Juppé secure the two spots for the second round of the centre-right primary elections
- Markets focus on the UK Autumn Statement this Wednesday
USD continues to hold near 1-year highs (vs. EUR) on improved growth expectations due to easier fiscal policy and increased expectations for a December Fed rate hike (market probability c.90%). USDJPY broke 111.00 in Asia trading whilst US 10-year treasury yields rose above 2.35% on Friday
Our [Barclays] traders continue to think momentum remains strong with the USD especially after Fed President Yellen did not seem concerned enough about USD strength to warrant mentioning in her testimony on Friday. Also in the US, Fed Kaplan commented that the Fed is making progress towards its 2% inflation target and is nearly ready to hike rates.
In French politics, Ex-Prime Minister Francois Fillon was the somewhat surprising winner of last night’s first round centre-right primary elections, beating Juppe and Sarkozy. Francois Fillon and Alain Juppé have secured the two spots for the second round of the centre-right primary elections next Sunday.
Barclays Research note that “…Mr Fillon is largely in the lead, especially with Sarkozy’s declared support for the second round, and conclude that the likelihood a Le Pen victory in the second round of the Presidential election has been reduced …” Our traders expect the results to lend support to the EUR, after the odds of a Marine Le Pen victory decreased.
In focus today, markets look to ECB President Draghi who speaks at European Parliament in Strasbourg, France. Later this week, attention turns to the UK Autumn Statement on Wednesday.
Barclays Research think “…this year’s Autumn Statement might just set the stage for a more content-full budget next year, as growth slows and the government gears up to prepare for withdrawal from the EU…”
Currency rates today: