Morning Report: 29 March 2018

March 29, 2018

GBP The pound took a substantial hit yesterday amidst a broad rally in the US dollar, but against most other currencies, overall sterling had a positive day. The main driver for the generally optimistic tone in the pound came amidst reports that progress is being made in Brexit negotiations over the contentious Irish border issue, which is considered one of the biggest potential stumbling blocks. In terms of economic data, Realised Sales figures were released by the Confederation of British Industry, and showed sales contracting slightly faster than expected, although the result was distorted by the “beast from the east” snowstorm. GfK consumer confidence came in higher than expected overnight at a -7 index reading, which remains indicative of overall pessimism among the surveyed consumers. Notable data releases today include M4 Money Supply MoM and the current account balance – of which the median forecast on Bloomberg is for a deficit of £24bn.

USD The greenback had a big day yesterday, strengthening against the entire G10 currency board in an environment characterized by lessened fears of an outright trade war, and good diplomatic news from North Korea. Somewhat ironically, the Japanese Yen was among the biggest losers of yesterday’s reduction in political risk, despite being well within range of North Korean missiles. Another boost to the dollar came from the release of the final version of US Q4 Gross Domestic Product, which was revised up to 2.9%, reaffirming the strength of the US economy and to some extent justifying the more hawkish path the Federal Reserve has taken. Today at 13:30 BST the Personal Consumption Expenditure Index is on the agenda together with weekly Unemployment Claims, with the Chicago Purchasing Manager Index following at 14:45 and Revised University of Michigan Consumer Sentiment at 15:00.

EUR The euro had an ambivalent day yesterday with losses against sterling and the greenback, while managing to outpace NOK, JPY and SEK. The German Gfk Consumer Climate survey was untouched by the recent equity market sell off and remained near multi-year highs. All throughout the day the different German states will release their Preliminary March Consumer Price Index figures, culminating in the nationwide figure at 13:00 BST.

CAD The loonie held firm against almost every major currency, but had to stomach some minor losses from USD. Datawise it was a quiet day for loonie, something which will change today at 13:30 BST when January Gross Domestic Product figures and the Raw Material Price Index are released.

UK news

  • Financial Times: Half of UK companies fail to report gender pay data. Only half of UK companies required to report their gender pay gap have done so, just a week before the reporting deadline.
  • Financial Times: Donald Trump replaces veterans affairs secretary. President Donald Trump has removed his secretary of veterans affairs David Shulkin and nominated the White House doctor (Ronny Jackson) to replace him in the cabinet-level role.
  • Reuters: The future is bright, promises May on tour of Brexit-divided country. Prime Minister Theresa May will promise Britain bright prospects outside the European Union on Thursday when she tours a country still deeply divided about its future as the countdown to Brexit starts its last 12 months.

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