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Short weeks ahead

Short weeks ahead

GBP
The Bank of England’s Gertjan Vlieghe stated that since November, economic data has indicated that the removal of monetary stimulus is increasingly warranted, adding that a pick-up in wages growth was underway. Significantly, there was the potential for one or two rate increases this year, which provided some Sterling support given that a May rate hike had been priced in. The Pound was undermined by a deterioration of risk appetite, especially given the substantial UK current account deficit.

Sterling, overall, still registered the strongest weekly gain since mid-January with the Euro settling around 1.1440. CTFC data recorded a significant increase in long Sterling positions just after the Brexit transition deal which may limit scope for fresh buying, although there was a further test of resistance above 1.4150 against the Dollar on market open this morning.

USD

The Dollar ended the week near the weakest it has been this year despite upbeat US durable goods orders Friday. The dovish Federal Reserve rate hike and emerging US-China trade weighed down the Greenback and limited buying. Further, the US Dollar is broadly lower due to the continuing global equity market as Cable closed the week in the 1.4130s and 1.2350s against the Euro.

This week, the market will be interested in the Q4 GDP results on Wednesday combined with Core Personal Consumption Expenditures on Thursday.

EUR

Friday was quiet in terms of economic data, but the EU achieved an exclusion from US steel and aluminium tariffs which should have provided more currency relief were it not for another terrorist attack in France that dampened sentiment. The trade war looks increasingly like a heavyweight fight between the two largest economies, the US and China. That could leave Europe off the hook for some of the worst consequences.

Data to Watch:

09:30 EUR German Buba President Weidmann speech
12:30 USD Chicago Fed National Activity Index (Feb)
16:30 USD Fed’s William Dudley speech
20:30 USD FOMC Member Mester speech
23:10 USD Fed’s Quarles speech

 

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