Super Wednesday

Markets remained in a holding pattern on Tuesday ahead of today's busy slate of releases from the UK, eurozone and US

Previous Day's Market Highlights

Markets remained in a holding pattern on Tuesday with little in the way of economic releases or major news flow to spark significant volatility. The only notable releases came from the US, and painted a mixed picture. Despite small business optimism reaching its highest levels of the year, a fall in job openings weighed slightly on the greenback. Data showed 7.09mln open vacancies at the end of February, well below forecasts and significantly below the recent record highs for the dataset. This is likely to have negative implications for wage growth, with the labour market perhaps not being as tight as had been thought. Over the course of the day, the dollar was 0.15% lower against a basket of peers. 

Elsewhere, the euro gained ground once again, recording its first spell of consecutive days of gains against the dollar since mid-March. The single currency touched a 2-week high of $1.1285, gaining 0.2% over the day. Meanwhile, Brexit continues to rumble on and dominate the pound. Rumours of Germany accepting a time limit on the Irish backstop saw sterling spike higher, though such rumours were quickly denied and the pound’s gains eradicated. Over the day, sterling was unchanged against the dollar and fell a shade over 0.1% against the euro. The day's major mover was the yen, which added 0.4% as investors struck a more risk-averse tone.
 
In other markets, global equities finished the day in negative territory as trade concerns weighed on investor sentiment. In Europe, the Stoxx 600 fell 0.35%, while in the US, the S&P 500 fell by 0.6%, snapping an 8-day rally. Finally, in commodities markets, oil prices slid after Russia cast doubt on additional output cuts. Both Brent and WTI lost more than 0.75% over the day. 

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1600 1.1803 1.1463 2.88%
GBP/USD 1.3075 1.3381 1.2976 3.03%
EUR/USD 1.1275 1.1448 1.1183 2.31%
GBP/AUD 1.8290 1.8851 1.8256 3.16%
GBP/NZD 1.9360 1.9512 1.8960 2.83%
GBP/CAD 1.7420 1.7795 1.7327 2.63%

Today's Market Highlights

Today could be considered a ‘Super Wednesday’ for markets, with several significant events in the UK, eurozone and US throughout the day. 

From the UK, focus will be on this evening’s emergency EU Summit, where expectations are that a Brexit delay will be agreed to. Though the exact points of an extension will be decided by leaders this evening, leaked drafts of proposals show that the EU are likely to grant a delay of up to 12 months, with a break clause for either side to terminate the delay early, either if the UK approves a deal or if the EU feel the UK is disrupting the working of the European Parliament. Such a plan mirrors President Tusk’s proposed ‘flextension’ mooted earlier in the week. A long extension to Article 50 is now seemingly priced into the pound, hence focus is now beginning to shift to how the domestic Brexit deadlock will be broken. Also of note from the UK will be this morning’s monthly GDP release, with expectations that economic growth will have flatlined in February. This comes as little surprise after recent survey data and will likely have little effect on the pound. 

In the eurozone, all eyes will be on this lunchtime’s ECB meeting, though no change to policy is expected after a fresh round of stimulus was announced in March. Instead, President Draghi’s press conference is likely to centre around 3 themes; the extent of the current economic soft patch, the impact of negative rates on eurozone banks and the technical details of the new TLTROs (cheap, long-term loans to banks). While any comments around the continued weak incoming economic data may pique some market interest, the lack of any policy changes will likely see the euro shrug off today’s meeting and remain confined to its recent trading ranges. 

Finally, from the US, focus is likely to fall on this evening’s release of minutes from the Federal Reserve’s March policy meeting where the Fed completed its dovish U-turn. Investors are likely to focus on the reasoning behind policymakers’ dovish change in rhetoric as well as the Fed’s assessment of the US economy against a backdrop of mixed domestic economic data and a broader global economic slowdown. Also in focus from the US will be this afternoon’s CPI inflation release, with expectations for core CPI to have remained at 2.1% on a year-on-year basis in March, modestly above the Fed’s target, though unlikely to change the central bank’s stance. 

Today's Economic Calendar

Time Currency Release Consensus Previous
09:30 GBP GDP (m/m - Feb) 0.0% 0.5%
12:45 EUR ECB Interest Rate Decision 0.0% 0.0%
12:45 EUR ECB Deposit Rate Decision -0.4% -0.4%
13:30 EUR ECB Monetary Policy Statement & Press Conference
13:30 USD CPI (y/y) 1.8% 1.5%
13:30 USD Core CPI (y/y) 2.1% 2.1%
Tentative (Evening) GBP EU Summit on Brexit
19:00 USD FOMC Meeting Minutes