15th February 2018 Market Update
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?? GBP – With no UK data releases yesterday, focus was on the “Road to Brexit” Speech given by Boris Johnson. Sterling initially lost some ground as Johnson’s speech didn’t bring much clarity on what the EU-UK relationship should look like after Brexit. He did however indicate that the UK should have the right to make its own rules and he also downplayed the benefits of being member of the single market/customs union. The pound however found some traction in the afternoon as equity markets moved higher and “risk” was back on.
There are no data releases from the UK today.
?? EUR – Yesterday the Eurozone’s GDP growth figures and in particular Germany’s results showed that the zone was set for a strong start to the year. This helped the euro across the board.
We have a few speeches today from ECB members Mersch, Praet and Lautenschlager, with markets watching out for any talk of cutting quantitative easing and starting the process of normalising rates, which could help boost the euro further.
?? USD – Retail sales missed expectations yesterday though inflation figures showed a surprised increase. The data helped the dollar to appreciate initially after the releases at 13:30, though the rally didn’t last long and the dollar fell back across the afternoon as markets now seemed to concerned with the potential of stagflation in the US.
Risk sentiment seems to be back on as equity markets were up yesterday causing investors to move out of the dollar.
Today, we will see the PPI inflation data release for January, which might attract more attention than usual after the surprise uptick in CPI inflation yesterday. In addition, industrial production data is expected to show a slowdown later in the afternoon.
10:00am: EUR Trade Balance
10:45am: ECB Praet Speech
13:30pm: US PPI expected at 0.4% from previous -0.1%
14:15pm: USD Industrial Production expected at 0.2% from previous 0.9%
Summary: US inflation figures were the focus of yesterday as markets saw a surprise increase. The initial knee jerk reaction saw the dollar appreciate but this all but fizzled out before the UK close and the dollar fell back yet again as investors dumped the currency.
The Chinese financial markets are closed from today until 22nd February for the Lunar New Year.
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