Newsletter – 12th April 2018

Morning Bulletin

Yesterday

  • UK Manufacturing Production was a slight shock print yesterday morning, having forecast month-on-month growth of +0.2% for February, the actual print was -0.2%. That was the first negative reading since July 2017 and saw the Pound retreat in FX space.
  • Sterling didn’t retreat for too long however as it tested and briefly surpassed the 1.4200 handle versus the US Dollar just after midday.
  • Once again yesterday, Sterling looked to press toward the psychologically significant 1.1500 level versus the Euro but came up just short and traded in a tight range of 1.1450-1.1480 for the remainder of the afternoon.
  • According to the ONS the UK’s Goods Trade Balance narrowed to a 5-month low in February. Expecting a trade deficit of -£12.2Bn, the actual print was –£10.2Bn.
  • UK GDP dropped to just 0.2% for the first quarter of 2018 according to the NIESR. The main reason for the weakness is said to have been the severe weather in March which likely disrupted activity in all major sectors of the economy.
  • Italian Retail Sales m/m 0.4% (0.3% Exp)
  • Speaking yesterday afternoon ECB member Hansson said that the recent low levels of inflation in the Eurozone are down to a combination of factors but that most were temporary in nature and that their impact would weaken over time. He added the ECB needed to remain patient in achieving their price stability goal (i.e. no immediate rush to remove stimulus or hike rates).
  • US Inflation data headlined yesterday afternoon and had been expected to remain flat month-on-month during March. The actual reading of -0.1% meant inflation fell for the first time in 10 months, with lower gasoline costs being a key driver of the fall.
Overnight

  • The US Dollar was briefly lifted yesterday evening following the release of minutes from the US Federal Reserves most recent policy meeting. The minutes revealed that all members see inflation pushing higher in the coming months with most members believing that gradual rate hikes remain appropriate. A number of members also saw the economic outlook as warranting a slightly steeper path of rate hikes.
  • Speaking at an event in Hong Kong, IMF Chief Christina Lagarde said she was optimistic on the outlook for global growth, but also warned of darker clouds looming with fiscal stimulus being withdrawn and interest rates beginning to rise. In clear reference to the US-China trade dispute, she also added that steering clear of protectionism should be one of the top priorities.
  • US Federal Budget Balance -208.7Bn (-191.0Bn Exp)
  • French Final CPI m/m 1.0% as expected.
Today
  • Relatively quiet on the data front today.
  • US Unemployment Claims arguably the key print at 1.30pm.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1465 +0.03
GBP/USD 1.4182 +0.06
EUR/USD 1.2369 +0.03
AUD/USD 0.7754 +0.06

 

Time (GMT) Region Data Release Forecast Previous
09.30 GBP BOE Credit Conditions Survey
10.00 EUR Industrial Production m/m 0.1% -1.0%
12.30 EUR ECB Monetary Policy Meeting minutes
13.30 CAD NHPI m/m 0.1% 0.0%
13.30 USD Unemployment Claims 231K 242K
13.30 USD Import Prices m/m 0.2% 0.4%
17.00 EUR ECB Member Weidmann Speaks
20.00 GBP BOE Gov Carney Speaks