18th February 2020 Market Update
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?? GBP – Yesterday was broadly quiet for most currencies, sterling included but data due this morning will end that calm. Jobs numbers due at 09.30 this morning are from January and will give us the first look at whether the reported increase in business sentiment has led to more jobs and higher wages.
A good number today and further hints from the government that higher spending could be announced as soon as next month’s Budget should be enough to allow traders and investors to forget about a near-term cut to interest rates by the Bank of England. We would see this as pound positive.
?? EUR – The single currency is largely on hold ahead of Friday’s manufacturing sentiment numbers that will give us a better idea as to how the Coronavirus is hammering China/Europe trade links. German ZEW – a reading of investor sentiment – due this morning is expected to mirror the nerves in wider markets and will cap any rallies for the euro for now we think.
?? USD – President’s Day was more like President’s Dull with dollar markets very quiet yesterday. An earnings warning from the tech company Apple, linked to weak demand and disruption to their supply chain, has shown just how much further the economic weakness could pervade. Interest rate markets are already betting that the Federal Reserve will have to cut interest rates at some point this year; the news from Apple is unlikely to alter that and could allow for some weakness in the USD in the coming sessions.
GBP: Jobs numbers should continue to show improvement
EUR: Waiting on Friday for clarity
USD: Apple warning highlights potential virus damage
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