UK GDP, ECB Meeting Accounts in Focus

The dollar is stronger this morning after the Fed's upbeat minutes. Attention today is on the second estimate of UK GDP and the ECB Meeting Accounts.

Previous Day's Market Highlights

The dollar strengthened after an initial move lower last night as the Fed minutes struck a confident tone and said that raising rates is increasingly appropriate as the economic outlook firms. Euro-dollar fell below 1.23 and sterling-dollar below 1.39. Markets are currently pricing in around an 85% chance that the Fed will hike in March, according to the CME FedWatch Tool.
 
After a muted reaction to the latest employment data, the pound picked up in response to the BoE’s inflation report hearings before the Treasury Select Committee. Governor Carney and other MPC Members reiterated that interest rates are headed higher and said that wage pressures may be building. However, the pound later drifter lower again.
 
As for the day’s Fed speakers, Kaplan struck a hawkish tone on expectations that inflation will head towards target and the Unemployment Rate will fall further. Harker was more dovish, seeing only two hikes this year (the Fed has projected three).

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1314 1.1512 1.1210 2.62%
GBP/USD 1.3886 1.4346 1.3763 4.06%
EUR/USD 1.2273 1.2556 1.2206 2.79%
GBP/AUD 1.7798 1.7861 1.7351 2.86%
GBP/NZD 1.8981 1.9466 1.8942 2.69%
GBP/CAD 1.7636 1.7716 1.7301 2.34%

Today's Market Highlights

The second estimate of Q4 GDP is expected to confirm that the UK grew 0.5% (09:30 GMT). The preliminary release typically has the greatest market impact, as was the case recently when the pound rallied on a higher figure than projected. Correspondingly, the release today may be a relatively non-event for the pound unless there are any revisions.
 
Attention then turns to the ECB’s Meeting Accounts, which could see some movement in the euro as investors look for nuance in the ECB’s inflation expectations and policy implications.
 
In the afternoon, Canadian Retail Sales, US weekly Initial Jobless Claims, and US EIA Crude Oil Inventories will be in focus. Overnight, New Zealand releases quarterly Retail Sales.

Today's Economic Calendar

Time Currency Release Consensus Previous
09:30 GBP GDP Second Estimate QoQ (Q4) 0.5% 0.5%
09:30 GBP GDP Second Estimate YoY (Q4) 1.5% 1.5%
09:30 GBP Total Business Investment YoY (Q4) 2.4% 1.7%
09:30 GBP Total Business Investment QoQ (Q4) 0.5% 0.5%
12:30 EUR ECB Monetary Policy Meeting Accounts
13:30 USD Initial Jobless Claims (Feb 16) 230K 230K
13:30 CAD Retail Sales MoM (Dec) 0.2% 0.2%
13:30 CAD Core Retail Sales MoM (Dec) 0.3% 1.6%
15:00 USD Fed's Dudley Speaks
16:00 USD EIA Crude Oil Inventories (16 Feb) 1.333M 1.841M
17:10 USD Fed's Bostic Speaks
20:30 USD Fed's Kaplan Speaks
21:45 NZD Retail Sales QoQ (Q4) 1.4% 0.2%
21:45 NZD Core Retail Sales QoQ (Q4) 0.7% 0.5%

Caxton