Morning Report: 05 April 2018
April 5, 2018
GBP Sterling took a knock around midday yesterday but recovered fairly quickly to close roughly flat against USD and up against the euro. The morning’s main data release was the Construction Purchasing Managers’ Index, which fell to 47.0, below the 50 reading that indicates overall reported growth. The reading was taken with a large pinch of salt by most, given the period it refers to was subject to extremely inclement weather. Today at 09:30 BST Services PMI will be released, representing the largest and most important sector of the economy.
USD USD had a mixed session yesterday but is broadly higher this morning. Trade tensions dominated the headlines as the Trump administration announced new tariffs against China Tuesday night, prompting swift, and almost poetic retaliation from Chinese authorities, with the Chinese embassy in Washington quoting an old proverb about reciprocation. Where China’s response to the previous tariffs was very moderate, yesterday’s measures were more substantial and targeted main US export industries like soybeans and chemicals. Today’s data calendar is rather quiet, with Challenger Job Cuts out at 12:30 ahead of weekly Unemployment Claims and updated US Trade Balance figures at 13:30 BST, a potential occasion for further twitter drama.
EUR Euro experienced a day of little direction as it barely moved against other currencies and the little moves we did see showed no discernible trend. March Eurozone Flash Consumer Price Index was firmer than the previous month at 1.4%, but once again the core reading was soft at 1.0%. This further highlights the European Central Bank’s dilemma in removing monetary accommodation, as core inflation is scarcely a whisker above from where it was when aggressive monetary expansion began in 2014. Today we have Final Services PMI at 9:00 BST followed by Retail Sales and the Producer Price Index at 10:00.
CAD The loonie continued its Tuesday rally yesterday and extended its gains against most major currencies, bar NZD and AUD. Canada’s main stock index fell to its lowest level in almost two months on fears of collateral damage from a trade war, as China may seek to prevent US goods circumventing tariffs by using Canadian ports. Today at 13:30 BST Trade Balance data will be published, which may come under some extra scrutiny as Trump recently made some remarks about the US’s empirically non-existent trade deficit with its northern neighbour.
- Bloomberg. Barclays’s Rating Cut by Moody’s to Lowest Investment Grade Barclays Plc’s ratings were cut by Moody’s Investors Service, citing concerns about earnings at the investment bank after the British lender split its riskier trading activities from its retail operations.
- Bloomberg. Top Pound Forecasters Are Bullish as Brexit Worries ‘Overplayed’ The most accurate pound forecasters are keeping calm and see the currency climbing more than 8 percent this year.
- Financial Times. Global businesses raise hopes of US-China trade compromise International businesses expressed hopes that a trade war between the US and China could be averted, urging the two countries to find a compromise before they go ahead with plans to impose steep new tariffs in the months to come.