Morning Report: 27 March 2018

March 27, 2018

GBP Sterling traded higher against the US dollar yesterday morning, and though was quite for the rest of the day. News headlines focused on domestic issues, with little new information on Brexit emerging. Today’s sole release of note was meeting minutes from the Bank of England’s Financial Policy Committee, which passed without incident.

USD Fears of a trade war may have receded slightly yesterday, but USD found little respite and sold off further against GBP and EUR. Cleveland Fed President Loretta Mester made comments on the rate outlook in a speech, echoing the general message of further policy tightening, while admitting Trade Policy was a source of uncertainty. The Case Shiller House Price Index will be released at 14:00 BST today, followed at 15:00 by CB Consumer Confidence and the Richmond Manufacturing Index.

EUR The euro began to regain momentum yesterday after a mixed week last week, as German Bundesbank head and future contender for European Central Bank Chair Jens Weidmann said it was not unrealistic to expect a rate hike from the ECB in mid 2019. Weidmann is the ECB’s most prominent hawk, and the comments don’t represent the consensus on the committee, but nonetheless represent another sign of impending ECB policy normalisation. This morning’s data has included a surprise contraction in the German Import Price index, which fell 0.6%. Spanish Consumer Price Index inflation also fell short of expectations, rising 1.2% year on year.

CAD After a wobble in the morning the loonie quickly regained the initiative and ended up closing higher against USD, extending its gains overnight. No headline loonie data will be released today.

UK news

  • Wall Street Journal: GlaxoSmithKline to Buy Out Novartis’s Stake in Health-Care Venture for $13 Billion GlaxoSmithKline PLC agreed to pay Novartis AG $13 billion for its 36.5% stake in their consumer health care joint venture, moving to consolidate the unit just three years after it and Novartis joined forces.
  • Financial Times: US stocks in biggest one-day gains since 2015 US stocks had their largest one-day gains for more than two and a half years on Monday, as fears of a trade war eased and investors regained their taste for technology shares.
  • Bloomberg: Trump’s Russian Expulsions Leave Moscow Stunned The U.S. president often accused of cozying up to the Kremlin suddenly looks closer than ever to the European allies he’s sometimes snubbed. Donald Trump on Monday expelled 60 Russian diplomats considered spies from the U.S., the most since 1986, demonstrating united resolve with Europe after the U.K. blamed Vladimir Putin’s government for a March 4 nerve-agent attack.

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