Draghi, Services Data in Focus

Attention today is largely on Services PMI Data and Draghi's testimony on the ECB's 2016 Annual Report.

Previous Day's Market Highlights

Sterling reversed tests of recent highs to end the week relatively unchanged. However, despite initial gains, the pound failed to regain 1.43 against the dollar or 1.15 against the euro, and on Friday it retreated below 1.42 and 1.14, respectively. Sterling-dollar has by and large held above 1.40 since 24 January.
The dollar strengthened Friday, in part as January jobs data surprised to the upside. Both the number of jobs added to the economy and wage growth were higher than expected, speaking to the strength of the labour market. This followed a Fed meeting that was relatively upbeat on the economy. Both developments will maintain market expectations for a March hike.  

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1326 1.1512 1.1197 2.72%
GBP/USD 1.4089 1.4346 1.3458 6.19%
EUR/USD 1.2439 1.2538 1.1915 4.97%
GBP/AUD 1.7785 1.7850 1.7098 4.21%
GBP/NZD 1.9300 1.9466 1.8613 4.38%
GBP/CAD 1.7503 1.7646 1.6778 4.92%

Today's Market Highlights

A larger-than-expected dip in the UK’s Services PMI to 53 may put some pressure on the pound this morning. Political uncertainty remains a risk as concerns around the future of May’s leadership and the tone of negotiations remain.
Slower Retail Sales growth may do little to support the euro ahead of ECB President Draghi’s testimony this afternoon before the European Parliament on the ECB’s Annual Report for 2016 (16:00 GMT). Investors will watch for clues to the ECB’s latest thinking on inflation and interest rates.
A pick-up in the ISM Non-Manufacturing PMI could strengthen the dollar this afternoon. With the data calendar lighter for the US this week, attention may primarily be on the week’s Fed speakers, and the upside for the dollar still seems relatively limited given that a March hike is already largely priced in.
The Reserve Bank of Australia is expected to keep interest rates on hold when it meets Tuesday morning. Other central banks in focus are the Reserve Bank of New Zealand and the Bank of England, both of which are also projected to keep rates on hold. The BoE meeting will be particularly closely watched as investors look for the Bank’s updated economic and inflation projections in its quarterly Inflation Report.  

Today's Economic Calendar

Time Currency Release Consensus Previous
09:30 GBP Markit Services PMI (Jan) 54.1 54.2
09:30 EUR Sentix Investor Confidence (Feb) 33.0 32.9
10:00 EUR Retail Sales YoY (Dec) 1.8% 2.8%
14:45 USD Markit Services PMI (Jan) 53.5 53.3
14:45 USD Markit Composite PMI (Jan) 53.9 53.8
15:00 USD ISM Non-Manufacturing PMI (Jan) 56.3 56.0
16:00 EUR ECB President Draghi Speaks
00:30 AUD Trade Balance (Dec) -256M -628M
03:30 AUD RBA Interest Rate Decision 1.50% 1.50%