Morning Report: 26 March 2018

March 26, 2018

GBP Sterling is trading up this morning, after a positive week last week that saw faster than expected wage growth figures, positive Brexit headlines, and a mildly hawkish set of meeting minutes from the Bank of England. The first half of this week will be slow in terms of data, with lending figures from UK Finance today’s sole release at 09:30 BST and meeting minutes from the Financial Policy Committee of the Bank of England out tomorrow. Thursday’s calendar is significantly more eventful, with Final Q4 GDP released alongside money supply data from the BoE and the Trade Balance.

USD USD had a poor week on the whole last week, as concerns about trade policy intensified. The headlines on trade may have turned marginally more positive over the weekend, but USD remains on the back foot this morning. Several newspapers including the Financial Times and the Wall Street journal are reporting that discussions are being held between US and Chinese officials on “mutually agreeable” ways to cut America’s trade deficit with the world’s second largest economy. No less than three members of the Federal Open Market Committee will speak over the next 24 hours, with Dudley, Mester, and Quarles speaking at 17:30, 21:30, and 00:10 BST respectively.

EUR The euro weakened across a number of crosses last week, but did hold on against the US dollar, further extending its gains this morning. Eurozone data may come under more scrutiny than usual this week, after a series of weak releases last week put the single currency on the defensive. German Bundesbank head and leading candidate for the next ECB President Jens Weidmann will speak today at 10:30 BST. Later in the week German Consumer Price Index inflation will be released on Thursday, followed by French and Italian numbers on Friday.

CAD The loonie rallied powerfully last week, as fears of a trade war moved from NAFTA to China. Friday’s data included faster than expected headline Consumer Price Index inflation, but a miss for headline Retail sales. This week’s sole release of note will be monthly Gross Domestic Product on Friday.

UK news

  • Financial Times: Theresa May fights to keep UK in EU satellite project Theresa May is leading efforts to stop an “outrageous” EU move to freeze Britain out of Europe’s €10bn Galileo satellite project, as space becomes a new frontier in Brexit negotiations.
  • Reuters: U.S., South Korea revise trade deal, Korean steel faces quota The United States and South Korea agreed to revise a trade pact sharply criticised by U.S. President Donald Trump, Seoul said on Monday, with U.S. automakers winning improved market access and Korean steelmakers hit with quotas but avoiding hefty tariffs.
  • Reuters: Parliament must have power to stop ‘No Deal’ Brexit, says opposition Labour Britain’s opposition Labour Party will on Monday demand that parliament has the final say on the government’s Brexit deal, including an option to send ministers back to the negotiating table rather than leave without an exit agreement.

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