Morning Report: 2 February 2018
February 2, 2018
GBP Sterling continued to trend upwards against USD yesterday, taking a small pause overnight, but fell back against the euro. UK politics remains in flux, with the various headlines either too tedious, tenuous, contradictory or unsubstantiated to mention in detail. The headlines in the latter half of this week appear to have had a muted effect on sterling, mainly due to the fact that they contained a lack of firm new information about either the direction of Brexit negotiations or the stability of the Government. Yesterday’s data included the Manufacturing Purchasing Managers’ Index, which fell well short of expectations with a reading of 55.3, which was nonetheless above the 50 level that indicates growth in the sector. The equivalent Construction Purchasing Managers’ Index will be released this morning at 09:30 GMT.
EUR The euro saw it’s highest daily close against USD since 2014 yesterday, as the greenback remained under pressure and the euro well bid on sustained expectations of a revision in forward guidance from the European Central Bank. Yesterday’s euro data was largely inconsequential, with Manufacturing Purchasing Managers indices across the eurozone generally showing a very rapid rate of expansion in the sector. Today at 10:00 GMT, eurozone Producer Prices will be released alongside the Italian Consumer Price Index.
USD The greenback remained heavily offered yesterday, and showed only a modicum of resistance overnight. US fixed income continued to sell off sharply, but the move towards higher yields did not offer any support to USD. Non-Farm productivity and unit labour cost data from the fourth quarter showed that unit labour costs had risen by 2%, in another indication of the tightness of the US labour market. Weekly Unemployment Claims were once again very low at just 230,000, and survey data from the Manufacturing sector was very optimistic. Today at 13:30 GMT, the monthly Non-Farm Payrolls report will be released.
CAD The loonie went on the offensive again yesterday, stopping just short of Wednesday’s four month highs against USD. Yesterday’s Manufacturing PMI data indicated a solid level of expansion in the sector, in what will be taken as an encouraging sign of broad economic expansion. No headline loonie data will be released today.
- Financial Times: UK weighing customs union deal after Brexit. Theresa May’s Brexit advisers are secretly considering whether Britain could strike a customs union deal covering trade in goods with the EU, a move that would severely limit the UK’s ability to strike out on its own.
- Guardian: Liam Fox: there will be no customs union with EU after Brexit. Liam Fox said the government was not considering continuing a customs union-style arrangement with the EU, insisting it would restrict the UK in forging new trade deals with the rest of the world.
- Daily Express: Jacob Rees-Mogg primed to REPLACE May! He has ‘everything public want’, claims Portillo JACOB Rees-Mogg has everything the public is crying out for and is “now the bookies’ favourite” to succeed Theresa May if a Conservative leadership election is called, it has been claimed.
- The Sun: THE SUN SAYS Tories must stop their infighting and get behind PM to make the best of Brexit. We can’t see a PM in waiting and the public seem to agree, so it’s about time the plotters consider what Theresa May has achieved.