Newsletter – 22 February 2017

Morning Bulletin

Yesterday

  • Rough day for the Euro yesterday. The single currency got hammered in FX space as political unrest, namely the French Presidential Elections, continues to spook markets and traders. The Euro suffered losses despite a raft of encouraging data at the outset of trading, including:
    • Eurozone Flash Manufacturing PMI 55.5 (55.0 Exp)
    • Eurozone Flash Services PMI 55.6 (53.7 Exp)
  • Sterling was just one benefactor of the weakening Euro and traded to a 2017 high of 1.1838. Similarly EUR/USD fell just shy of a 2017 low at 1.0525.
  • UK Public Sector Net Borrowing recorded a 17 year high for the month of January yesterday morning. A surplus of£9.8Bn was recorded, largely due to a record high take in self-assessment tax receipts. This figure left year to date borrowing far below the levels recorded last year, and could leave Chancellor Hammond with some money to play with in his upcoming budget.
  • Bank of England Members including Governor Carney, Haldane and McCafferty addressed a Parliamentary Treasury Committee yesterday morning, some key points:
    • Haldane: Broadly neutral stance on the likely course of interest rates
    • McCafferty: Hopes to begin gradual interest rate normalisation over next 2-3yrs
    • Carney: Since November there has been no rise in market inflation expectations
    • Carney: Short-term inflation expectations are however rising, but consistent with temporary inflation overshoot.
  • Speaking again yesterday, Philly Fed Governor Harker reaffirmed his view that 3 US rate hikes could be on the table this year, assuming the economy stays on track.
  • New Zealand Global Dairy Trade Index -3.2% (1.3% previously).
Overnight

  • Australian Wage Price Index q/q 0.5% as expected.
  • Australian Work Done (Construction) q/q -0.2% (0.5% Exp).
  • The Euro continues to get smashed in FX space this morning.
Today

  • Busy data calendar today, with releases from UK, Europe, US and Canada.
  • Key release this morning is UK quarterly GDP at 9.30am (0.6% Expected).
  • The US Fed minutes from their most recent meeting will be closely scrutinised by traders later this evening, although we have already heard a number of FOMC members suggest March meeting could be live for a rate hike.

 

MAJOR CURRENCY PAIRS
Current at time of distribution

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1860 +0.19
GBP/USD 1.2463 +0.06
EUR/USD 1.0505 -0.23
AUD/USD 0.7696 +0.31

 

ECONOMIC CALENDAR
Current at time of distribution
Time (GMT) Region Data Release Forecast Previous
09.00 EUR German IFO Business Climate 109.6 109.8
09.30 GBP Second Estimate GDP q/q 0.6% 0.6%
09.30 GBP Prelim Business Investment q/q 0.0% 0.4%
10.00 EUR Eurozone Final CPI y/y 1.8% 1.8%
11.00 GBP BOE Member Cunliffe Speaks
13.30 CAD Retail Sales m/m 0.1% 0.2%
15.00 USD Existing Home Sales 5.55M 5.49M
18.00 USD FOMC Member Powell Speaks
19.00 USD FOMC Meeting Minutes