Newsletter – 28th February 2018

Morning Bulletin

Yesterday

  • Eurozone M3 Money Supply data came in at 4.6% as expected.
  • Speaking yesterday morning ECB Member Weidmann said if the Eurozone’s economic upswing continues and inflation rises he sees no reason not to end their massive bond buying program this year. Mr Weidmann also added he does not see a historic rate hike in 2019 as unrealistic.
  • There were two key economic figures out of the US yesterday afternoon and they were mixed. Core Durable Goods Orders in January were down -0.3% against an expected rise of +0.4%, whilst Consumer Confidence surged to a reading of 130.8 in February. That was the highest reading since 2000 and was up on the expected 126.2, suggesting American consumers are optimistic and positive about the US economy in the 6 months ahead.
  • The US Dollar was given a lift yesterday afternoon following the testimony of new Fed Chair Jerome Powell. Mr Powell was speaking before Congress and his upbeat tone put a real spring in the step of the Dollar. Powell’s testimony appeared to signal that his appointment would not change the central bank’s course on continuing their rate hike path and that a hike in March was almost nailed on.
  • Having opened the morning around 1.3985, GBP/USD closed the day down at 1.3931, but did trade as low as 1.3858.
  • Meanwhile EUR/USD having traded at 1.2340 in the morning, plummeted down to 1.2221 before closing the day around 1.2242.
  • The pound remained under Brexit related pressure yesterday afternoon, following comments from the EU’s Chief Brexit negotiator Barnier who warned that the UK’s demands for its future relationship with the EU are ‘illusory’. Mr Barnier also quashed the idea of an open-ended transitional period, saying the UK must leave the EU on the 31st December 2020.
  • There were also a number of other US figures released yesterday afternoon:
    • Goods Trade Balance -74.4Bn (-72.3Bn Exp)
    • Prelim Wholesale Inventories m/m 0.7% (0.3% Exp)
    • Richmond Manufacturing Index 28 (15 Exp)
Overnight

  • China Manufacturing PMI 50.3 (51.2 Exp)
  • China Non-Manufacturing PMI 54.4 (55.3 Previous)
  • Japan Retail Sales y/y 1.6% (2.3% Exp)
  • Japan Prelim Industrial Production m/m -6.6% (-4.1% Exp)
Today
  • Eurozone Inflation is the key print at 10am this morning and will be closely watched. Economists expect a CPI y/ print of 1.2%.
  • US GDP will be the focus of this afternoon, with a print of 2.5% expected.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1375 +0.06
GBP/USD 1.3890 -0.11
EUR/USD 1.2207 -0.20
AUD/USD 0.7800 +0.16

 

Time (GMT) Region Data Release Forecast Previous
10.00 EUR Eurozone CPI Flash Estimate y/y 1.2% 1.3%
10.00 EUR Italian Prelim CPI m/m 0.3% 0.3%
13.30 CAD RMPI m/m 1.8% -0.9%
13.30 USD Prelim GDP q/q 2.5% 2.6%
14.45 USD Chicago PMI 64.2 65.7
15.00 USD Pending Home Sales m/m 0.4% 0.5%