22nd February 2019 Market Update
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?? GBP – Brexit news continues to dominate, with Sterling gaining some ground in the morning yesterday following a speech by Phillip Hammond who said that talks with Brussels had been constructive and that lawmakers could vote on a revised deal as early as next week. However, the sentiment was reversed very soon after with a UK official stating that a Brexit deal is unlikely next week as the UK is a long way from getting what it needs on backstop.
In addition, Bloomberg reported that the EU expects Theresa May to request a three month delay to Brexit, quoting two EU officials. Though according to another official, May could be forced to contemplate a longer delay if she cannot get backing for the agreement.
No data is expected for release from the UK today, though focus remains on Brexit negotiations.
?? USD – US economic data revealed a mixed bag of results yesterday with jobless claims and services data higher but the durable good, manufacturing and home sales releases all disappointed, thus we saw little movement in the dollar.
US and China trade negotiations continued yesterday in Washington to try and hash out a deal that could end their trade war ahead of the US imposed 1 March deadline. The talks are due to end today, but could be extended into next week and if no agreement is reached by the deadline US tariffs on USD200bn of Chinese imports are set to rise 10% to 25%.
The Fed Monetary policy report is due to be release today along with speeches from a plethora of Fed Officials this evening. Though unlikely we see much movement as the main topic of conversation will be about the target level for the Fed’s balance sheet and almost all Fed board members have already agreed that they want to end the balance sheet reduction by the end of the year.
?? EUR – Yesterday, the harmonised CPI figure in Germany remained in negative territory in line with the consensus keeping the euro pressured. Preliminary Eurozone data for manufacturing fell into contraction though the services figure expanded by more than the expectation, causing little movement as a result.
German IFO figures have surprised to the downside this morning missing the mark on all three components and further highlighting economic woes in German, following the disappointing growth figures for Q4 2018 and subdued inflation figures yesterday. Later today, ECB President Mario Draghi will be speaking and will likely sound dovish, strengthening bearish pressures around the Euro.
GBP: Sterling sees little movement, but remains sensitive to any Brexit negotiation news.
USD: Economic data shows mixed picture for US economy, Chinese trade war talks conclude today.
EUR: German economic data weighs on the Euro, with dovish comments expected to from the central bank this afternoon.
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