Morning Report: 9 April 2018

April 9, 2018

GBP Poor data was no barrier for sterling last week, and the pound advanced against both the euro and dollar. This morning Halifax’s House Price Index beat expectations to show a monthly increase of 1.5%, leaving annual growth at 2.7%. Tomorrow morning the British Retail Consortium’s Retail Sales Monitor will be released and will be especially interesting due to several months of weak consumer spending. Later in the week, Industrial Output data will be released on Wednesday.

EUR Following a week of losses the euro made minor gains against the dollar on Friday but lost out against the pound. The single currency did come under some pressure in the morning after poor industrial production figures came out from Germany showing a fall of 1.6% MoM in February, falling well short of the +0.2% forecast. However, this blip was soon corrected mainly due to poor US employment growth figures. Today, figures reported by the German Federal Statistics Office showed Germany’s trade balance fell in February to 18.4bn, mainly driven by a 3.2% MoM decline in exports, which a decline in imports failed to counteract. At 9:30 BST Sentix releases Eurozone Investor Confidence data for the Eurozone.

USD The dollar came under broad pressure on Friday after a mixed week that did see it strengthen against the euro across the week as a whole. March’s Non-Farm Payrolls report showed US employment growth slowed to just 103,000 jobs, coming in under the forecast of 188,000. Fed Chair Jerome Powell acknowledged the slowdown in job creation in his speech to the Economic Club in Chicago on Friday. Powell nonetheless sounded relatively hawkish, talking about a strong economic foundation for the US, despite highlighting a reduction in the supply of prime-aged workers, specifically citing the negative impact of the opioid epidemic in the US. Consumer Price Index inflation will be released on Wednesday alongside meeting minutes from the Federal Open Market Committee.

CAD The loonie had a mixed day on Friday after an equally mixed bag of employment data. Job growth was higher than expected, with the economy adding 32,000 jobs in March. Wage growth remained high at 3.1% year on year, although this was slightly less than expected. Today at 15:30 BST the Bank of Canada Business Outlook Survey will be released, offering a comprehensive look at business optimism.

UK news

  • Financial Times: Perella Weinberg brings in UK dealmakers. Perella Weinberg Partners is bringing in a trio of seasoned UK dealmakers to help lift the US corporate advisory group’s performance in Europe’s largest market for mergers and acquisitions.
  • Bloomberg: China Is Studying Yuan Devaluation as a Tool in Trade Spat. China is evaluating the potential impact of a gradual yuan depreciation, people familiar with the matter said, as the country’s leaders weigh their options in a trade spat with U.S. President Donald Trump that has roiled financial markets worldwide.
  • Bloomberg: Deutsche Bank Must Regain ‘Hunger for Business,’ CEO Sewing Says. Deutsche Bank AG’s new Chief Executive Officer Christian Sewing said the lender needs to be faster at making decisions and clear out unnecessary bureaucracy as he set out his first goals as head of Germany’s largest lender.

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