UK deal, a privilege
It seems the UK and the EU are starting to make positive movements as Sterling was given a fresh sense of support from reports the EU parliament would offer the UK “privileged single-market access” after Brexit. Fresh optimism supported Sterling which gained on the Dollar throughout the morning and the opening of the US trading session before steadying just below the 1.4000 level at the close of play. The Euro lost out to Sterling, especially during the morning, reaching the mid-1.1300s.
In a relatively empty economic calendar yesterday, CBI industrial orders index was weaker than expected, dropping to 10 for February from 14 the prior month – the worst reading for four months. Overall sentiment remained at large, however, with another sturdy reading for exports with the threat of rising costs easing slightly.
The latest average earnings data will be monitored closely today with the market expecting an unchanged reading of 2.5%. Further, the testimony from Bank of England officials to the Treasury Select Committee is expected to deliver further evidence of Governor Carney’s rate hike cycle plans.
The US Dollar is continuing its recovery from the three-year low hit last week with the Dollar index up 1.6%, pointing towards a comeback for the world’s reserve currency.
The continued rise on Tuesday after the US markets opened after a long weekend came despite economic data being sparse for the most part. The USD managed to remain strong as investors focused on the upcoming Federal Open Market Committee (FOMC) meeting minutes.
Investors will be waiting for the release of the FOMC recent meeting minutes, the last one held under Yellen’s leadership, and should assist investors to determine the Dollar’s next directional move.
February’s German ZEW Investor Confidence index fell to 17.8, down from January’s 20.4 as the Current Conditions component edged lower, although the print was above forecasts. Eurozone Consumer Confidence declined slightly to 0.1 for February and January’s result was revised up slightly at 1.4, remaining close to record highs. The Euro remained vulnerable to position adjustments, suffering losses against Sterling and also undermining support to hit lows below 1.2330 against the Dollar.
This morning’s Eurozone PMI data will be scrutinised for evidence on growth momentum and pricing trends ahead of the March European Central Policy (ECB) policy meeting.
Data to Watch:
08:00 EUR Non-monetary policy’s ECB meeting
08:30 EUR Markit PMI Composite (Feb)
08:30 EUR Markit Manufacturing PMI (Feb)
08:30 EUR Markit Services PMI (Feb)
09:00 EUR Markit Manufacturing PMI (Feb)
09:00 EUR Markit Services PMI (Feb)
09:00 EUR Markit PMI Composite (Feb)
09:30 GBP ILO Unemployment Rate (3M) (Dec)
09:30 GBP Average Earnings including Bonus (3Mo/Yr) (Dec)
09:30 GBP Average Earnings excluding Bonus (3Mo/Yr) (Dec)
09:30 GBP Claimant Count Change (Jan)
09:30 GBP Claimant Count Rate (Jan)
09:30 GBP Public Sector Net Borrowing (Jan)
14:00 USD FOMC Member Harker Speech
14:15 GBP BOE’s Governor Carney speech
14:15 GBP Inflation Report Hearings
14:15 GBP MPC Member Broadbent Speech
14:15 GBP MPC Member Haldane Speech
14:15 GBP MPC Member Tenreyro Speech
14:45 USD Markit Manufacturing PMI (Feb)
14:45 USD Markit PMI Composite (Feb)
14:45 USD Markit Services PMI (Feb)
19:00 USD FOMC Minutes