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Calm before the storms

Calm before the storms

Sterling found some support yesterday as UK yields rose marginally compared to German rates, but concerns over global risk appetite gave way to a choppy trading session.

The Pound did manage to make gains against the Euro to break the 1.1300 resistance level due to poor sentiment surrounding the Euro whilst Brexit uncertainties were a significant feature ahead of the New York open. Concerns about stagnant progress in talks led Cable to a mixed trading session before ending at lows of 1.3918.

Markets will be gearing up for a ‘’super’’ week in terms of economic and political events and are likely to be exposed to events outside of the UK today.


The Greenback, in terms of the US Dollar Index, has started a negative drive and continues to fade from the recent bullish attempt, at one stage hitting the 92.00 level but falling currently in around the vicinity of 90.00 level.

The Greenback came under further selling pressure following the Washington Post story that President Trump could fire (current) National Security Adviser Herbert McMaster.

In the meantime, the US political situation (Trump’s cabinet reshuffle), geopolitical tensions (US sanctions against Russia) and policy trade (potential tariffs on Chinese imports) are likely to steer Dollar sentiment, at least in the coming days.

On the US data front, Housing Starts and Building Permits are due later, followed by the flash print of Consumer Sentiment for the current month and Industrial/Manufacturing Production during February.


The Euro struggled to make an impression before the US market opened and remained under some pressure during the day. A decline in Eurozone bond yields limited currency support as position adjustment continued. Euro selling gathered pace later in the afternoon, testing the 1.2300 support area as the Dollar gained some traction on expectations of a hawkish Fed statement next week.

In the market today, Eurozone inflation is set for release at 10am; modest increases are expected. With inflation well below the European Central Bank’s (ECB) target, only a sub-par print is likely to affect the Euro.

Data to Watch:

10:00 EUR Labour cost (Q4)
10:00 EUR Consumer Price Index – Core (YoY) (Feb)
10:00 EUR Consumer Price Index (MoM) (Feb)
10:00 EUR Consumer Price Index (YoY) (Feb)
10:00 EUR Consumer Price Index – Core (MoM) (Feb)
12:30 USD Building Permits (MoM) (Feb)
12:30 USD Housing Starts (MoM) (Feb)
13:15 USD Capacity Utilization (Feb)
13:15 USD Industrial Production (MoM) (Feb)
14:00 USD Michigan Consumer Sentiment Index (Mar)
17:00 USD Baker Hughes US Oil Rig Count


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