Morning Report: 24 April 2018

April 24, 2018

GBP. Sterling weakened further to the US dollar yesterday, as the news media focussed on the royal birth, the US dollar strength remained the main theme of global markets. Political developments contained little in the way of new information. Theresa May reckoned with legislative setbacks in the House of Lords and the ongoing issue of customs union membership, along with other sundry political scandals. Sterling was largely unaffected. Government borrowing data will be released this morning at 09:30 GMT, followed at 11:00 BST by Industrial Order Expectations from the Confederation of British Industry.

USD. Having opened the week with a burst of strength, the US dollar took a bit of a breather overnight after reaching a three month high on the DXY index. Fixed income yields remained a major fixation for the markets, although the benchmark 10 year treasury did not quite break through the important 3% psychological level. Purchasing Managers Indices from Markit for the Services and Manufacturing Sector showed a better than expected level of reported activity growth while Existing Home Sales were marginally better than expected. House price data will be released at 14:00 BST today, followed at 15:00 by New Home Sales and the Richmond Manufacturing Index.

EUR. Like most other major currencies the euro took a hit against USD yesterday but largely held its ground against sterling. Purchasing Managers’ Index data for various countries and the eurozone as a whole was released, and showed a slowing but still generally a decent level of reported activity growth. Notably, the French Flash Services PMI printed at 57.4, indicating an acceleration in April. This morning’s main release will be German IFO Business Climate at 09:00 BST.

CAD. The loonie weakened further yesterday, as Bank of Canada Governor Stephen Poloz reiterated previous dovish rhetoric about NAFTA. Speaking to lawmakers from the House of Commons, Poloz said that NAFTA uncertainty was hampering investment, a sentiment the BoC also expressed in other official recent communications, including last week’s monetary policy report. Other topics from the MPR also got a mention, including interest rate sensitivity and the housing market.

UK news

  • Financial Times: Theresa May rejects calls for confidence vote on customs union Theresa May’s office rejected calls on Monday for the prime minister to stake her position as prime minister on Britain’s departure from the EU’s customs union after Brexit.
  • Wall Street Journal: Macron’s Washington Visit Tests Whether Friendship Trumps Policy Divides French President Emmanuel Macron arrived for the first state visit of Donald Trump’s presidency, in a test of whether personal chemistry between the two leaders can bridge a yawning policy divide.
  • Bloomberg: Deutsche Bank Is Weighing Massive Cuts in Its U.S. Cash Equities Unit Deutsche Bank AG is considering extensive cuts to its cash equities business in the U.S. as part of a wider restructuring of its investment bank, according to people familiar with the matter.

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