Newsletter – 16 March 2017

Morning Bulletin

Yesterday

  • We saw a mixed day for sterling yesterday after it gained over 1% on the US dollar but GBP/EUR closed down a fraction.
  • As expected, the FOMC raised US interest rates by 0.25% ensuring their upper band on interest rates sits at 1.00%.
  • The US dollar weakened after Janet Yellen advised that markets should expect two more interest rises in 2017 when it is likely that three more rate hikes had been priced in.
  • This disappointed investors so GBP/USD rallied and EUR/USD followed suit printing a 1.2% increase on the day.
  • Elsewhere, Chancellor Philip Hammond performed a U-turn on his controversial Budget policy to increase National Insurance contributions for some self-employed workers in the UK after a facing a backlash from some Conservative backbenchers.
  • In terms of data we saw stronger than expected UK employment data with claimant count change coming in at -11.3K vs 3.2K expected and the unemployment rate coming in at 4.7% vs 4.8% expected. The average earnings index 3m/y did fall short of expectations at 2.2% vs the estimated figure of 2.4%.
  • We also saw firmer data from the US with CPI m/m coming in at 0.1% vs 0.0% and core retail sales m/m at 0.2% vs 0.1%. Retail sales (inc. motor vehicles) m/m did however fall short at 0.1% vs 0.2% expected.
Overnight
  • New Zealand GDP q/q was weak at 0.4% vs 0.7% and we also saw weaker than expected employment data from Australia with employment change and the unemployment rate coming at -6.4K and 5.9% vs expected figures of 16.3K and 5.7%, respectively.
Today
  • The Monetary Policy Committee announce the UK interest rate today at midday and it is expected to remain at 0.25%. As always this will accompanied by the Monetary Policy Summary and the votes of the MPC members.
  • Before this we have Final CPI y/y from the Eurozone which is expected to come in at 2.0%.
  • At 12.30pm we have building permits, unemployment claims and Philly fed manufacturing index data from the US.

 

MAJOR CURRENCY PAIRS
Current at time of distribution

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1432 -0.10%
GBP/USD 1.2256 -0.26%
EUR/USD 1.0716 -0.14%
AUD/USD 0.7689 -0.26%

 

ECONOMIC CALENDAR
Current at time of distribution
Time (GMT) Region Data Release Forecast Previous
10.00 EUR Final CPI y/y 2.0% 2.0%
12.00 GBP Official Bank Rate 0.25% 0.25%
12.00 GBP Monetary Policy Summary
12.00 GBP MPC Votes 0-0-9 0-0-9
12.30 USD Building Permits 1.26m 1.29m
12.30 USD Philly Fed Manufacturing Index 30.2 43.3
12.30 USD Unemployment Claims 245K 243K