Global stocks markets up
Yesterday Sterling was supported by the underlying belief in the UK economic recovery and the vaccine rollout progress. Sterling sentiment was also assisted by Monday’s optimistic commentary from Bank of England Governor Bailey. Global influences swayed the Pound more than usual with renewed strength in equities and positivity surrounding risk appetite. The only fly in the ointment was Dr Chris Whitty’s warning that accelerating the re-opening plans would have serious repercussions. Sterling pushed back above 1.3900 to the Dollar before fading away and reaching 1.1695 against the Euro.
This morning there is slightly less confidence in risk appetite, bond yield trends remain significant and choppy trading continues. The Pound initially dropped to 1.3850 to the Dollar before recovering and the Euro pushed back slightly to 1.1665.
The US NFIB small business confidence index edged higher to 95.8 for February from 95.0 previously. There was further evidence of a tighter labour market and there was also upward pressure on prices, maintaining the overall focus on inflation trends.
There is an element of caution ahead of today’s US consumer prices data with headline prices forecast to increase 0.4% on the month to give a 1.7% annual increase with the core rate expected to remain at 1.4% for the month.
White House Economic Adviser Ramamurti reiterated that the risks of doing too little to stimulate the economy outweigh the risks of doing too much at this moment in time which led to a rise in GBP against the USD.
Overall confidence in the Eurozone outlook remains fragile and whilst securing a slight reprieve in early trading yesterday, the single currency was able to recover further ground as the US Dollar’s recent strong hold over the currency markets eased with a retreat from 3-month highs.
The Euro pushed to highs above 1.1900 against the Dollar as commodity currencies also secured a recovery, but was unable to maintain the more positive tone as underlying sentiment remained cautious.
As of writing, the Euro currently trades around the 1.1875 mark against its US counterpart.
Data to watch
08:30 – USD – CPI
08:30 – USD – Core CPI
10:30 – USD – Crude Oil Inventories
13:01 – USD – 10-y Bond Auction