Delay tactics surpass 1,000th day
UK labour market data surprised with a drop in unemployment to a 44-year low of 3.9%, while the employment increases had also out-performed expectations. Annual average earnings growth beat forecasts of a drop when it held at 3.4%, but the jobless claimant count increased. The Sterling response was fleeting as politics inevitably dominated but expectations of a long Brexit extension coincided with higher oil prices to provide buying support.
The Pound fell back after lunch following evidence of Cabinet divisions over a Brexit extension and uncertainty that the EU would respond favourably. If only we could monetise some of this uncertainty? Theresa May looks likely to request an extension to June 30th to give parliament time to back a Withdrawal Agreement and the EU will likely ask why and attach conditions. A decision may not appear until next week. Sterling starts fractionally lower this morning as confusion and uncertainty continue to fog the picture. Sterling starts around 1.3250 against the Dollar and 1.1695 on the Euro.
US factory goods orders data was slightly below consensus forecasts, although there was no significant market impact. It was a sharp decline in three months, and the Dollar LIBOR rates was a factor in curbing Dollar demand with the rate at 2.61% compared with highs above 2.82% in December.
The Dollar tended to drift weaker yesterday evening, especially with commodity currencies making headway, but selling was contained and it recovered from intra-day lows with the Euro settling just above 1.1350.
The Federal Reserve (Fed) decision could have a significant impact on the Greenback later today. The US central bank is set to leave its policy unchanged and add some substance to the pledge to remain patient on interest rates. The new dot-plot will likely be downgraded from the two rate increases the Fed forecast for 2019 back in December 2018.
The German ZEW investor confidence index strengthened for March, coming in above consensus forecasts and the fifth successive gain, giving some support to the Eurozone. The wider Eurozone confidence index also strengthened to a ten-month high, increasing confidence further. There was a dip in the German current conditions index which curbed any significant Euro growth despite German yields moving higher. Versus the Dollar, the Euro hit 1.1362 but then struggled to maintain this level.
Data today sees the German producer price index for February, followed by the non-monetary policy European Central Bank (ECB) meeting. There is then a raft of data out of the UK including RPI and the producer price index. UK data is then rounded off by CPI numbers for February, however, the main news is coming from across the pond with the Fed’s interest rate decision this evening.
Data to watch:
00:00 AUD RBA’s Bullock speech
05:00 JPY Leading Economic Index (Jan)
07:00 EUR Producer Price Index (MoM) (Feb) (Germany)
09:30 GBP Retail Price Index (MoM) (Feb)
09:30 GBP Retail Price Index (YoY) (Feb)
09:30 GBP PPI Core Output (YoY) n.s.a (Feb)
09:30 GBP Producer Price Index – Input (YoY) n.s.a (Feb)
09:30 GBP Core Consumer Price Index (YoY) (Feb)
09:30 GBP Consumer Price Index (YoY) (Feb)
09:30 GBP Consumer Price Index (MoM) (Feb)
14:00 CHF SNB Quarterly Bulletin (Q1)
18:00 USD FOMC Economic Projections
18:00 USD Fed’s Monetary Policy Statement
18:00 USD Fed Interest Rate Decision
18:30 USD FOMC Press Conference
21:45 NZD Gross Domestic Product (QoQ) (Q4)
21:45 NZD Gross Domestic Product (YoY) (Q4)