The U.S. dollar rose above $1.0645 versus the euro in trading this morning to reach a multimonth high. Currency and fixed-income markets are now bracing for further strength as a rate hike by the Federal Reserve at the December FOMC meeting is now nearly a consensus and expectations are rising for the European Central Bank to expand its quantitative-easing program in response to sluggish growth and moribund inflation. The dollar’s strength drove gold prices lower in London trading, erasing gains from a modest flight-to-safety rally sparked by the Paris terror attacks. Spot gold prices reached a five-year low in dollar terms late last week.
U.K. inflation data remains weak. Data released today by the Office of National Statistics revealed headline consumer inflation for the U.K. stuck at 0 percent for October versus September, while producer prices tumbled by more than 1 percent for the month. While prices remain subdued, a marginal rise in the core consumer price index, which excludes volatile food and energy components, suggests that deflationary pressure on the U.K. economy may have found a bottom.
Cable merger proposed. On Monday London’s Liberty Global announced an offer to acquire U.K. rival Cable & Wireless Communications in a transaction that would provide Liberty with 6 million new customers throughout the Caribbean basin. The proposed terms would value the target at $5.3 billion in cash and stock. Liberty, which is controlled by U.S. investor John Malone, already owns 13 percent of Cable & Wireless’s shares.
Sentiment picks up for German economy. November economic sentiment data from Germany’s Zentrum für Europäische Wirtschaftsforschung (ZEW) released this morning improved significantly, with the headline index rising to 10.4 versus a prior 1.9 and consensus forecasts of 5.5. Both the current situation subindex for Germany and the broader, euro zone-wide sentiment indices fell marginally however, suggesting that geopolitical doubts still overshadow confidence in a successful outcome for ECB easing measures.
Defection at Citi. Kevin Russell, global head of equity trading, reportedly announced his departure from Citigroup yesterday. The news marks the second departure of a senior executive since Michael Caperonis stepped down as head of equity trading for the Americas earlier in the November.
Natural gas reserves hit all-time high. The Energy Information Administration released revised natural-gas inventory data Monday as part of a new calculation method, revealing a total 7 billion cubic feet more than last week’s initial release, for an all-time record of 3.99 trillion cubic feet. Going forward the agency will now bracket reserve figures into five regional groups rather than three.
SEC investigation of Congressional staff to move ahead. In a ruling Monday, U.S. District Judge Paul Gardephe cleared the way for the Securities and Exchange Commission to proceed with an investigation of members of the House Ways and Means Committee and former congressional staffers in an insider-trading case related to health care policy. In his ruling, Judge Gardephe declared that committee members must comply with the SEC’s subpoena while limiting discovery to evidence that falls outside “legislative activity.”
Wal-Mart posts better than expected earnings. In an announcement today Wal-Mart Stores Inc. today released third-quarter results with earnings per share of $0.99 cents beating analyst forecasts of $0.98 and also raised guidance for full year profits. The retailer, headquartered in Bentonville, Arkansas, announced last month that it anticipated lower profits in 2016 prompting a sell-off in share price.
