Morning Report: 16 April 2018

April 16, 2018

GBP. Sterling had a relatively good week of last, finishing it off by maintaining its 10 month highs against the euro and reaching its second highest level since the EU referendum. It’s shaping up to be a decisive week for sterling, with the release of top-tier data in the form of Tuesday’s labour market report, Wednesday’s Consumer Price Index inflation, and Thursday’s Retail Sales. Today at 14:30 BST, the CB Leading Index, an amalgamation of forward looking economic data, will be released. Brexit headlines have been benign recently, and negotiations will occur throughout the first half of this week.

EUR. The euro has shot out of the blocks this morning, seeking to claw back some of the losses seen last week. Last week saw a series of negative surprises in Eurozone data, notably in Germany’s trade balance and the Eurozone’s Industrial Production, and a dovish set of European Central Bank Meeting Minutes. Last week’s releases were consistent with other recent data in suggesting that Eurozone growth is starting to slow down. Second-tier data will be released this week, with the Eurozone ZEW Economic Sentiment Survey released on Tuesday and Flash Consumer Price Index released on Wednesday.

USD. USD came under pressure against several major currencies on Friday, including sterling, euro and aussie, and has seen further broad losses this morning. This week’s data calendar will be busy, and the potential for political drama seems high given that further sanctions against Russia are likely to be announced today, according to US officials. Retail Sales will be released this afternoon at 13:30 GMT and will be accompanied by the Empire State Manufacturing Index, a business survey. Business Inventories will be released at 15:00 with the NAHB Housing Market Index. On Tuesday Building Permits and Housing Starts will be followed by a plethora of Fed speakers and Industrial Production.

CAD. The loonie had some swings throughout the day on Friday but eventually closed slightly weaker against USD and other G10 currencies. This week’s major event will be the Bank of Canada’s Rate Statement and the accompanying Monetary Policy Report and press conference, but Consumer Price Index and Retail Sales will warrant attention on Friday.

UK news

  • Financial Times: Theresa May faces backlash over Syria air strikes. Theresa May will have to explain to parliament on Monday why she did not seek its consent before launching air strikes on Syria, as pressure mounts from the UK’s Labour party.
  • Bloomberg: Ruble Slides as Russia Awaits Fresh U.S. Sanctions Over Syria. The ruble retreated with Russian bonds and stocks as investors braced for the announcement of new U.S. sanctions aimed at punishing the Kremlin for its backing of Syrian leader Bashar al-Assad.
  • Reuters: Russia’s Putin predicts global ‘chaos’ if West hits Syria again. Russian President Vladimir Putin warned on Sunday that further Western attacks on Syria would bring chaos to world affairs, as Washington prepared to increase pressure on Russia with new economic sanctions.

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