Newsletter – 7th March 2018

Morning Bulletin

Yesterday

  • Despite a lack of data there was still a fair amount of movement in FX markets yesterday morning, and it was the US Dollar that was on the back-foot as President Trump’s threats to impose hefty tariffs continue to weigh on the currency.
  • The Pound rallied from 1.3825 to a day’s high of 1.3929 by Midday against the Dollar.
  • Similarly EUR/USD traded from 1.2340 to 1.2414 in the same timeframe.
  • Speaking yesterday afternoon, and in sync with current market expectations, US Fed Member Kaplan said he is in favour of three rate hikes this year and that raising rates now would give the economy the best chance of pushing ahead. Kaplan also added that Trump’s planned Steel and Aluminium tariffs could have a chilling effect on relations with Mexico and Canada.
  • There were hints yesterday from the EU’s Guy Verhofstadt that Brexit talks could finally be about to move on to trade, following constructive crunch meetings with PM May and Brexit Sec Davis. It appears Citizens rights remains the final hurdle for talks to progress to trade.
  • US-North Korea relations were back in the frame yesterday, but on a more positive note than we have been used to, President Trump tweeted: ‘Possible progress being made in talks with North Korea. For the first time in many years, a serious effort is being made by all parties concerned. The World is watching and waiting! May be false hope, but the U.S. is ready to go hard in either direction!’
  • There were some Economic data releases yesterday, albeit slightly low key:
    • Eurozone Retail PMI 52.3 (50.8 Previously)
    • Canadian Ivey PMI 59.6 (56.3 Exp)
    • US Factory Orders m/m -1.4% (-0.4% Exp)
    • New Zealand Global Dairy Trade Price Index -0.6%(-0.5% Previously)
Overnight

  • Confirmed overnight, Gary Cohn has now resigned from his role as a top economic adviser to US President Donald Trump. Mr Cohn was at odds with the President over his proposed plans to place hefty tariffs on aluminium and steel imports.
  • Speaking ahead of the GDP print Reserve Bank of Australia Governor Lowe warned that the decline in Australian manufacturing is likely to impact the recovery in business investment in the years ahead.
  • Australia GDP q/q 0.4% (0.5% Exp)
  • Japan Leading Indicators 104.8% (106.2% Exp)
  • UK Halifax HPI m/m 0.4% as expected
Today
  • Could prove a quiet morning session with no key data set for release.
  • The Bank of Canada will be the focus of today’s trading with their rate decision and accompanying statement due at 3pm.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1175 -0.18
GBP/USD 1.3870 -0.11
EUR/USD 1.2409 +0.05
AUD/USD 0.7807 -0.26

 

Time (GMT) Region Data Release Forecast Previous
10.00 EUR Revised GDP q/q 0.6% 0.6%
13.00 USD Fed Member Bostic Speaks
13.15 USD ADP Non-Farm Employment Change 194K 234K
13.20 USD Fed Member Dudley Speaks
13.30 CAD Trade Balance -2.5Bn -3.2Bn
13.30 CAD Labour Productivity q/q 0.1% -0.6%
15.00 CAD Overnight Rate 1.25% 1.25%
15.00 CAD BOC Rate Statement