Newsletter – 18th January 2018

Morning Bulletin


  • The Bank of Canada took centre stage yesterday afternoon, and as expected following a run of increasingly positive economic data, they opted to hike interest rates by 0.25%. That now takes their benchmark interest rate up to 1.25%and the highest level since 2009.
  • Despite the positive move on rates, the Canadian Dollar actually closed the day with small losses against a number of it’s currency counterparts. That was because the hike was expected, but the central bank’s accompanying statement struck a cautious tone, with the BOC suggesting they are in no rush to hike rates further, citing risks around NAFTA weighing on the economic outlook.
  • The only data of note yesterday morning was Eurozone Inflation, with the CPI y/y print of 1.4% in-line with expectations, but down from a previous 1.5%. Inflation continues to be sluggish within Europe and well below the ECB’s 2% target.
  • Just the two other prints following the BOC’s rate decision, and they were out of the US:
    • Capacity Utilization Rate 77.9% (77.3% Exp)
    • Industrial Production m/m 0.9% (0.4% Exp)
  • Speaking yesterday morning, Bank of England member Michael Saunders suggested the UK’s Unemployment Rate could drop to fresh lows in 2018, surpassing both the BOE’s and most other economists expectations. He also added that the shorter term economic outlook was neither great, nor terrible and that even growth of around 1.5-2.0 percent this year could be enough to see a further tightening in the labour market.

  • The UK Parliament has passed the EU (Withdrawal) Bill in a 324 to 295 vote. The Bill will now move to the House of Lords for further scrutiny.
  • US Fed Members Kaplan and Evans both talked up the US economy at an event last night. Both suggested 2018 would be a good year for the US economy with growth of 2.5% or more, enough to drive the unemployment rate even lower than its current 17-year low. However they continue to disagree on the number of rate hikes required to keep the economy in check, with Kaplan convinced three hikes will be necessary, whilst Evans said he supported fewer than three so as to allow inflation to reach or even temporarily rise above the Fed’s 2% target.
  • Australia Employment Change 34.7K (13.2K Exp)
  • Australia Unemployment Rate 5.5% (5.4% Exp)
  • China GDP q/y 6.8% (6.7% Exp)
  • China Industrial Production y/y 6.2% (6.1% Exp)
  • All of our key data is now due this afternoon, potentially quiet morning session ahead.


Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1330 -0.18
GBP/USD 1.3829 +0.02
EUR/USD 1.2205 +0.17
AUD/USD 0.7976 +0.09


Time (GMT) Region Data Release Forecast Previous
13.30 USD Building Permits 1.29M 1.30M
13.30 USD Housing Starts 1.28M 1.30M
13.30 USD Philly Fed Manufacturing Index 24.9 26.2
13.30 USD Unemployment Claims 250K 261K
14.30 GBP CB Leading Index m/m -0.2%