Previous Day's Market Highlights
The dollar gained ground on Friday, chalking up its 3rd straight day of gains by adding 0.3%, as investors moved into the safety of the greenback after a string of lacklustre economic data releases from around the globe. The main data miss came from Canada, where GDP from the final quarter of last year fell to a miserly 0.4% on an annualised quarter-on-quarter basis, well short of expectations for 1% growth and far below the previous reading of 2%. The Canadian dollar fell by more than 1% after the data which emphasised the fragility of the Canadian economy and is likely to deter the Bank of Canada from any policy tightening for now.
Further weighing on investors’ minds were uninspiring manufacturing PMI surveys from the UK, eurozone and US. The former was released in line with expectations, with the index reading 52.0, though the industry remains in expansionary territory only due to record-high stockpiling ahead of the UK leaving the EU. The poor data, along with profit taking ahead of the weekend, lead to a 0.4% decline in sterling over the course of the day. The other economies data points were equally disappointing, with the manufacturing industry remaining in contraction in the eurozone and the US survey falling to its lowest level in 18 months. Further weighing on the single currency was a decline in core inflation to just 1% on a year-on-year basis, showing the lack of inflationary pressures in the bloc. The single currency lost 0.15% over the course of the day.
In other markets, equities on both sides of the Atlantic finished the week with gains as optimism that the US and China would agree a trade deal buoyed markets. The pan-European Stoxx 600 added 0.4%, while the US benchmark S&P500 gained 0.7% to close above the key 2800 level for the first time since November 2018. Finally, oil prices lost ground, with both Brent and WTI losing more than 2% as the poor manufacturing figures sparked concerns over future demand.
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Today's Market Highlights
The new week begins with a sparsely populated economic calendar, though things do pick up as the week progresses. The main data highlight for the day ahead appears set to be construction PMI figures from the UK, with expectations for the survey to remain in just remain in expansionary territory. Pre-Brexit stockpiling is once again likely to underpin the reading, potentially masking a slowdown in the sector. Despite the data, sterling is likely to take its lead from any Brexit-related news and shrug off the relatively low-tier release.
Elsewhere, no data is due from the US while the only notable point from the eurozone is February’s producer price index, expected to show prices increasing at 0.4% on a month-on-month basis. Though not typically a major market mover, the PPI figure can act as a leading indicator for the more widely-used CPI inflation measure, hence the release may have a modest impact on both the euro and the ECB’s decision making process. No other major economic releases are due on Monday, nor are any central bank speakers due.
Looking ahead to the remainder of the week, the calendar is much busier with both economic data and central bank meetings coming to the fore. The most significant data point comes on Friday, with the release of the monthly US labour market report, where focus will likely fall on wage growth and any downward to last month’s strong payrolls figure. Other notable data points include GDP from the eurozone and Australia as well as a plethora of services PMI readings. Looking to central bank meetings, the European Central Bank (ECB) will likely steal the limelight, with investors paying keen attention to policymakers’ assessment of the slowing of economic activity as well as potential hints of a delay to the ECB tightening monetary policy. The Reserve Bank of Australia (Tues) and Bank of Canada (Weds) also meet, with no expectations for changes to monetary policy.
Today's Economic Calendar
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