Previous Day's Market Highlights
Sterling extended its gains from Friday, adding a further 0.3% against both the euro and the dollar – reaching a 1-week high against the greenback, despite political uncertainty being increased after the resignation of 7 MPs from the Labour Party to sit as independents in Parliament. Despite the gains, such a move by lawmakers is likely to act as a headwind to the pound in the longer-run with opponents to Brexit now split and the chances of an early general election modestly increasing. Markets will be closely watching whether any further MPs, from either side of the political divide, make their move and join the breakaway group.
Elsewhere, major currencies remained rangebound amid a lack of major economic data releases and subdued trading volumes owing to the President’s Day holiday in the US. The euro advanced modestly, gaining just under 0.2% against the dollar, despite the German central bank commenting that they expect growth to be subdued throughout the first half of the year. The overnight release of minutes from this month’s Reserve Bank of Australia (RBA) meeting also failed to spark significant volatility, with the RBA reiterating that the probabilities of a rate hike and a rate cut are “evenly balanced”.
In other markets, European equities had a mixed day. The UK’s FTSE 100 lost around 0.3% as the pound advanced while Germany’s DAX lost 0.1% with the index weighed down by rumours of tariffs being imposed by the US on European auto imports. The pan-European Stoxx 600 gained 0.2%, while markets in the US were closed. Finally, in commodities markets, gold advanced by around 0.4% to reach its highest level in over 9 months at $1327/oz. In contrast, oil prices dipped, with both Brent and WTI losing 0.2%, but remaining on track for their strongest first quarters in eight years.
|Currency Pairing||08:00 Today||Vs 08:00 Yesterday||Four-Week High||Four-Week Low||% Change|
Today's Market Highlights
Tuesday’s economic calendar is slightly busier after yesterday’s barren schedule, with the re-opening of US trading desks also likely to add to both trading volumes and market liquidity. The main highlight today will be the monthly UK labour market report, which has remained positive in recent months despite the Brexit-related uncertainty. Expectations are for wages (including bonuses) to increase further from last month’s post-crisis high to a rate of 3.5% on a 3-month-on-year basis, with such an outcome resulting in wages outpacing inflation for the 3rd consecutive month. Also released will be the unemployment rate, expected to hold steady at a multi-decade low of 4%. A positive release could provide sterling with a further boost, though any rallies will likely remain capped by ongoing Brexit-related uncertainty ahead of a planned meeting between PM May and President Juncker later this week.
Other economic data is of lower tier, however German economic sentiment figures are likely to attract significant attention in light of fears of an economic slowdown. Expectations are for sentiment to rebound slightly to -13.4, though remaining firmly in pessimistic territory for the 11th consecutive month. Elsewhere, market participants are likely to focus on this afternoon’s US housing data as well as the overnight release of trade balance figures from Japan. The Kiwi dollar may also experience some volatility as results from the latest dairy price auction are released.
Finally, the central bank speakers schedule is also busy, with the ECB’s de Guindos and Praet due to address markets. In addition, the Fed’s Mester is scheduled to speak this afternoon ahead of tomorrow’s Fed meeting minutes release.
Today's Economic Calendar
|9:30am||GBP||Average Earnings - Inc. Bonus (3m/y)||3.5%||3.4%|
|9:30am||GBP||Claimant Count Change||2.4k||20.8k|
|10:00am||EUR||German ZEW Economic Sentiment Survey||-13.4||-15.0|