Morning Report: 7 March 2018

March 7, 2018

GBP Sterling took advantage of a general sell off in the dollar yesterday, but weakened against the euro. Today, European Union and French officials are expected to publicly rebuff Theresa May’s ambitions to achieve regulatory recognition and full access for UK financial services firms, though it is unclear if this will represent sufficiently new information to move the needle for sterling. This morning’s sole release of note was the Halifax House Price Index, which came in at XXX against a forecast of 0.4%.

EUR The euro strengthened sharply yesterday, extending its gains into this morning. Yesterday’s sole release of note was the Retail Purchasing Managers’ Index, which beat expectations and showed a decent rate of reported expansion. The calendar heats up today somewhat, with revised Gross Domestic Product growth due to be released at 10:00 GMT.

USD Amidst rising trade tensions and the resignation of White House economic advisor Gary Cohn, a wave of risk-off sentiment hit markets, causing some weakness in the greenback which lost against sterling, euro and other G10 currencies. Reports emerged that North Korea has shown a willingness to turn in its nuclear toys in exchange for the guaranteed safety of the the regime, though this did nothing to support the dollar. Elsewhere, one of the most prominent doves of the US Federal Reserve, Lael Brainard, expressed more confidence in how current inflation dynamics warrant gradual rate hikes. Today at 13:15 GMT ADP’s estimate of Non-Farm Payrolls will be released.

CAD The loonie rallied yesterday from the multi-month weakness it endured against USD earlier this week, only to sell of again this morning. Concerns about US trade policy are likely to remain a drag on loonie, as NAFTA negotiations continue under a cloud of US protectionism. Today promises to be an interesting day for the Canadian currency with the Trade Balance released at 13:30 GMT, followed by a Bank of Canada Rate Statement at 15:00 GMT.

UK news

  • Financial Times: Brussels and Paris to rebuff May’s Brexit hopes for City  Theresa May’s plan to secure London’s place as Europe’s financial services capital after Brexit will suffer a serious setback on Wednesday when Brussels and Paris are to publicly rebuff her proposals to maintain the City’s access to the EU single market. Mrs May’s negotiating stance, to be fleshed out in a speech by Chancellor Philip Hammond on Wednesday, would allow UK-based institutions to continue to enjoy high levels of market access under a deal where Britain and the EU agreed a set of regulatory outcomes, even if they were achieved in different ways.
  • Financial Times: Gary Cohn quits after losing trade battle with Trump Gary Cohn, Donald Trump’s top economic adviser, has resigned after losing a heated White House battle over tariffs, dealing a big blow to Washington Republicans and business leaders seeking to prevent the president from igniting a global trade war.
  • Reuters: Top UK ministers to meet on illness of Russian spy British investigators will update an emergency response committee of senior ministers today about the mystery illness that has struck down a former Russian double agent and his daughter.

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