Equities, Brexit Headlines in Focus

With a lighter calendar, equities and Brexit headlines remain in focus.

Previous Day's Market Highlights

The pound continued to move lower yesterday, dipping to nearly three-week lows against the euro below 1.13 and two-week lows against the dollar below 1.40. Brexit uncertainties weighed on the pound again as headlines focused on its future customs relationship. The dollar strengthened below 1.24 against the euro, supported in part by a jump higher in the ISM Non-Manufacturing Purchasing Managers’ Index.
 
Data showed that the UK’s Services sector slowed more than forecast in January. The Markit Services PMI fell to 53, the lowest since September 2016. Combined with earlier weaker Manufacturing and Construction prints, this release increases concerns about the impact on January’s economic growth.
 
The Reserve Bank of Australia kept interest rates on hold as was widely expected, while trade and retail sales data came in short of expectations. The Aussie traded more softly overnight following the releases.  
 
Equities extended losses after falling Friday on higher inflation concerns and rising bond yields as expectations that global monetary policy will become less accommodative increase. The DJIA had its biggest single-day point drop. Jerome Powell was sworn in as the new Chair of the Federal Reserve.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1262 1.1512 1.1197 2.72%
GBP/USD 1.3960 1.4346 1.3458 6.19%
EUR/USD 1.2396 1.2538 1.1915 4.97%
GBP/AUD 1.7751 1.7861 1.7098 4.27%
GBP/NZD 1.9112 1.9466 1.8613 4.38%
GBP/CAD 1.7490 1.7646 1.6778 4.92%

Today's Market Highlights

The data calendar is quieter today. In the afternoon, the US and Canada release December trade figures (13:30 GMT). Given the light data calendar, the global rout in equities and political headlines will remain in focus and may prove to be the main driving forces of currency movement today. Sterling-euro has held below 1.13 and sterling-dollar below 1.40 this morning.
 
In the evening session, softer Q4 employment data, particularly slower Employment Change and a lower Participation Rate, may weigh on the New Zealand dollar.

Today's Economic Calendar

Time Currency Release Consensus Previous
13:30 USD Trade Balance (Dec) $-52.0B $-50.5B
13:30 CAD Trade Balance (Dec) $-2.20B $-2.54B
13:50 USD Fed's Bullard Speaks
NZD Global Dairy Trade Price Index 4.9%
15:00 CAD Ivey Purchasing Managers' Index s.a. (Jan) 59.9 60.4
21:45 NZD Unemployment Rate (Q4) 4.6% 4.6%
21:45 NZD Employment Change (Q4) 0.2% 2.2%
21:45 NZD Participation Rate (Q4) 70.8% 71.1%

Caxton