Newsletter – 30th March 2017

Morning Bulletin

Yesterday

  • History was made yesterday as the UK Government formally notified the European Union of their intentions to leave the 28 member state club. We are now into uncharted territory as the UK becomes the first ever member state to withdraw from the Union.
  • As many had predicted there was an initial sell off of Sterling Tuesday evening and again into Wednesday morning, however that sell off was rather tame in comparison to the previous sell offs in sterling post referendum.
  • The Pound having absorbed those early losses then fought back throughout the day limiting any losses and in fact closing the day up strongly against the Euro. GBP/EUR opened trading yesterday just a fraction below 1.1500 and closed around 1.1550.
  • ·The Euro was also weakened somewhat yesterday by an ECB source that claimed the ECB’s March meeting message was over interpreted by markets and that policymakers are unlikely to be considering any policy shift in April.
  • In South Africa, President Jacob Zuma’s plan to oust Finance Minister Gordhan has been opposed by three party leaders according to some reports. The Rand is performing well in FX markets this morning as a result.
  • There wasn’t a great deal of economic data releases yesterday:
    • UK Net Lending to Individuals m/m 4.9Bn as Expected.
    • US Pending Home Sales m/m 5.5% (2.3% Exp).
  • Speaking yesterday evening US Fed Member Rosengren suggested the Federal Reserve should hike rates 3 more times this year due to the strength of the US economy.
  • Shortly afterwards we also heard from Fed member Williams who also struck a Hawkish tone; not quite as much as his colleague. Williams stated not to “rule out more than three increases total for this year”.

Overnight

  • According to a ‘Gallup’ poll President Trump’s approval rating is at an all-time low. Sitting at 35%; that is lower than Obama’s lowest rating of 38% and Bill Clinton’s worst rating of 37%.
  • Swiss KOF Economic Barometer 107.6 (105.9 Exp)
  • Spanish Flash CPI y/y 2.3% (2.6% Exp)

Today

  • Relatively quiet morning with some European data already released and just German CPI to come.
  • This afternoon our key data comes from the United States in the form of GDP and Unemployment Claims both due at 1.30pm.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1548 -0.03
GBP/USD 1.2411 -0.19
EUR/USD 1.0744 -0.18
AUD/USD 0.7652 -0.19

 

Time (GMT) Region Data Release Forecast Previous
TBC EUR German Prelim CPI m/m 0.4% 0.6%
13.30 CAD RMPI m/m 0.8% 1.7%
13.30 USD Final GDP q/q 2.0% 1.9%
13.30 USD Unemployment Claims 244K 261K
16.00 USD FOMC Member Kaplan Speaks
16.15 USD FOMC Member Williams Speaks