Newsletter – 21st March 2018

Morning Bulletin

Yesterday

  • UK CPI y/y data headlined yesterday morning and showed Inflation had dropped a little further than expected in February. The print of 2.7% was lower than the 2.8% expected and down from 3% in January. This fall in inflation will be welcome news to UK Households and consumers.
  • The Pound did lose ground largely across the board following the lower than expected inflation print. With Inflation falling, if sustained, there will be slightly less pressure on the Bank of England to act to cool it through increasing interest rates.
  • The one currency the pound didn’t slump against yesterday morning was the Euro, and that was down to a sharp drop in the German ZEW Economic Confidence reading. The print of 5.1 was massively short of the 13.1 expected, and down from 17.8 previously.
  • Canadian Wholesale Sales m/m 0.1%  as expected.
  • NZ Global Dairy Trade Index -1.2% (-0.6% Previously).
  • Eurozone Consumer Confidence as expected.
  • According to the EU’s chief Brexit negotiator Michel Barnier the most difficult negotiations still lie ahead and are likely to come at the end of the process in his experience. Barnier said apart form the Irish Border issue, other matters still to be agreed related to data protections and the geographical indications of various goods or the automatic recognition of each others’ court rulings.
Overnight
  • The overriding message from yesterday’s meeting of G20 ministers was a rejection of protectionism and an urge for more dialogue in an attempt to end trade wars.
  • The United States have dropped their demand that all cars exported to the US from Mexico and Canada must contain at least 50% of US content.
Today
  • Today is going to be book ended by key UK data this morning and then the US Federal Reserve later this afternoon/evening.
  • At 9.30am we have a raft of key UK jobs data with Average Earnings headlining. With the surprise drop in CPI yesterday could we see the inflationary squeeze on households abate?
  • We then wait until 6pm for the US Federal Reserve’s interest rate decision and accompanying press conference. Interest rates are widely expected to be increased by 25bps this evening.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1424 -0.07
GBP/USD 1.4040 +0.30
EUR/USD 1.2289 +0.39
AUD/USD 0.7693 +0.14

 

Time (GMT) Region Data Release Forecast Previous
09.30 GBP Average Earnings Index 3m/y 2.6% 2.5%
09.30 GBP Claimant Count Change -3.1K -7.2K
09.30 GBP Public Net Sector Borrowing -0.4Bn -11.6Bn
09.30 GBP Unemployment Rate 4.4% 4.4%
11.00 GBP CBI Industrial Order Expectations 9 10
12.30 USD Current Account -125Bn -101Bn
14.00 USD Existing Home Sales 5.41M 5.38M
18.00 USD Federal Funds Rate <1.75% <1.50%
18.00 USD Fed’s FOMC Statement
18.30 USD Fed’s FOMC Press Conference
20.00 NZD RBNZ Official Cash Rate 1.75% 1.75%
20.00 NZD RBNZ Rate Statement