Newsletter – 14th February 2018

Morning Bulletin

Yesterday

  • UK Inflation data headlined yesterday morning, with a raft of measures released including PPI Input m/m which was 0.7%as expected and RPI y/y which at 4.0% was slightly lower than the expected 4.1% Exp.
  • The key figure however was CPI y/y with Inflation remaining at 3.0% and near that 6-year high of 3.1%. Economists had forecast a slight fall to 2.9% and as a result the Pound rallied in FX space.
  • Sterling rallied as investors and markets see a greater chance of the Bank of England hiking rates as soon as May whilst Inflation continues to remain at these higher levels.
  • GBP/USD traded to a day’s high of 1.3924, whilst GBP/EUR peaked at 1.1288.
  • Such has been the underlying weakness of the Pound since Brexit talks recommenced last week, those gains proved short lived as the Pound came under pressure into the close of the day.
  • According to reports yesterday, South Africa’s ruling party the ANC have formally asked President Jacob Zuma to resign. The decision to ‘recall’ him followed what were described as marathon talks between the ANC’s top leadership body.
  • Speaking yesterday afternoon US Fed Member Mester said if the economy evolves as she anticipates further interest rate rises will be appropriate this year and next, and at a similar pace to last year. She also believes Inflation will reach the Fed’s 2% target over the next one to two years.
Overnight

  • President Trump aimed further threats to global trading partners once again yesterday, this time China and South Korea were in the firing line with Trump stating that America’s steel and aluminium industries were being ‘decimated’ by ‘dumping’. Trump warned he could impose sanctions against China, whilst vowing to revise or scrap its free trade deal with South Korea.
  • Japan Prelim GDP q/q 0.1% (0.2% Exp)
  • New Zealand Inflation Expectations q/q 2.1% (2.0% Prior)
  • German Prelim GDP q/q 0.6% as expected
  • German Final CPI m/m -0.7% as expected
Today
  • Eurozone GDP is our key print this morning, due at 10am.
  • This afternoon focus switches to the US with Inflation and Retail Sales data at 1.30pm.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1231 -0.14
GBP/USD 1.3891 +0.01
EUR/USD 1.2369 +0.16
AUD/USD 0.7868 +0.12

 

Time (GMT) Region Data Release Forecast Previous
09.00 EUR Italian Prelim GDP q/q 0.4% 0.4%
10.00 EUR Flash GDP q/q 0.6% 0.6%
10.00 EUR Industrial Production m/m 0.1% 0.1%
13.30 USD CPI m/m 0.3% 0.1%
13.30 USD Retail Sales m/m 0.2% 0.4%
15.00 USD Business Inventories m/m 0.3% 0.4%