Previous Day's Market Highlights
The pound experienced a volatile trading day on Thursday, first falling as markets became increasingly concerned over the lack of a Brexit breakthrough, before paring losses after the EU announced that they would be granting an extension to Article 50 and giving the Prime Minister one last chance to pass the Withdrawal Agreement in Parliament. The pound fell to as low as $1.30, and below the €1.15 level, in morning trade, largely as rumours swirled that any extension would be short, worrying markets over the prospect of a no-deal exit. However, such concerns were allayed after President Tusk announced the terms of the Article 50 extension that the EU will grant the UK. Should the UK pass the Withdrawal Agreement in Parliament next week, the Brexit deadline will be pushed back until 22nd May. However, should no deal be passed, Article 50 will only be extended until 12th April at which point other options will be assessed. The two-week postponement to Brexit has provided sterling with support, as the likelihood of no-deal diminishes once again. Over the day, the pound lost 0.1% against the euro and 0.5% against the dollar.
Elsewhere, a couple of central banks announced their latest monetary policy decisions. The Bank of England and Swiss National Bank both announced no changes to monetary policy, though the BoE continued to mention that “gradual and limited” tightening of policy would be required, contingent on the Brexit outcome. The SNB also gave food for thought, commenting that the franc remains “highly valued” and that the FX market situation would be closely monitored. The franc gained 0.5% over the day.
Economic data was of largely low importance, though retail sales numbers from the UK provided a glimmer of good news for the UK economy, showing sales increasing at 0.4% on a month-on-month basis in February. Initial jobless claims from the US beat expectations, aiding the greenback as it climbed 0.6% to erase the majority of the losses seen after the Fed’s dovish monetary policy announcement. In contrast to the dollar, the euro lost ground, closing down by around 0.4%, with below-forecast consumer confidence numbers not helping the single currency.
In other markets, European equities had a mixed day. London’s FTSE 100 gained around 0.9%, largely due to the fall in the pound, though the pan-continental Stoxx 600 dipped by 0.1% - weighed down by declines in German markets. In contrast, US markets rallied strongly, led by technology stocks. The benchmark S&P 500 added 1.09% over the day. Finally, crude oil prices did little on Thursday, but remained firm near year-to-date highs as tight supply continues to underpin the market.
|Currency Pairing||08:00 Today||Vs 08:00 Yesterday||Four-Week High||Four-Week Low||% Change|
Today's Market Highlights
Today’s focus will turn back to economic data, with any Brexit-related developments set to come next week. This morning’s main highlight will be the latest set of PMI figures from the eurozone, with expectations for the survey to continue to firm as economic data from the bloc beginning to recover after a poor start to the year. Consensus is for the manufacturing PMI to show a reading of 49.5, though rebounding back towards the key 50 barrier - the distinction between contraction (below) and expansion (above). Meanwhile, the services figure is expected to remain resilient at 52.7, with the more widely watched composite measure set to tick upwards to 52.0. Any above forecast data is likely to support the euro and set some fears of an economic slowdown to rest.
Elsewhere, attention will turn to Canada, with no major economic data due from the UK or the US. This afternoon sees both inflation and retail sales numbers from Canada, with the former key after the Bank of Canada indicated a dovish policy stance at their last meeting. Expectations are for core CPI to have increased at just 1.2% on a year-on-year basis, with the headline CPI figure expected unchanged at 1.4% on the same basis. Such sluggish inflation is likely to leave the BoC on hold for longer, with the Fed’s elongated pause to tightening policy also giving the BoC little reason to tighten policy. Retail sales may provide some reassuring news however, with expectations for sales to have increased at 0.4% on a month-on-month basis in January.
Looking ahead to next week, Brexit looks set to dominate once again, even though the deadline for leaving the EU is no longer the end of next week. The government is due to table an amendable motion on Monday to lay out its planned way forward, though expectations are that MPs will table amendments trying to take over the process themselves. Reports are also circulating that a third meaningful vote will be held in the early part of next week, though such a vote would be dependent on the Commons Speaker allowing it. Other highlights next week include the RBNZ’s latest policy decision as well as GDP figures from the UK, US and Canada.
Today's Economic Calendar
|12:30||CAD||Retail Sales (m/m)||0.4%||-0.1%|
|12:30||CAD||Core CPI (y/y)||1.2%||1.5%|
|18:00||USD||Monthly Budget Statement||-227bln||9bln|