BoE Comments, UK GDP and Labour Data, FOMC and RBA Meeting Minutes Ahead19 February 2018 by FC Exchange
It could be an eventful week in the currency market with labour market stats, central bank comments, and other key economic data due to make its way onto the market this week, say industry experts FC Exchange.
GBP – UK retail sales disappoint
– The pound dipped mid-week when the International Monetary Fund (IMF) said that the UK needed to up its production. The IMF said: ‘Directors agreed that structural reforms should prioritise enhancing productivity, inclusiveness, and external competitiveness.’
– On Thursday, the GBP/USD exchange rate breached the 1.40 barrier yet again as US dollar weakness continued following inflation data being published Stateside.
– Sterling slipped on Friday when UK retail sales came in weaker than expected. The ecostats came in at 1.5% on the year in January, up from 1.3% the previous month, but well below forecasts for 2.4% growth.
– UK Prime Minister Theresa May met German Chancellor Angela Merkel on Friday which spurred hopes that the UK might get a good deal post-Brexit. Angela Merkel stated that she wanted the EU and UK to remain ‘as close as possible’ once the UK had exited the European Union.
The pound is beginning the week above the 1.40 level against the US dollar (GBP/USD). Bank of England (BoE) Governor Mark Carney is due to speak this afternoon at an event in London and markets may scrutinise his words carefully. This week may see some significant movement on central bank comments as Wednesday will continue with four BoE officials (including Carney) speaking in London. The speeches will come after the UK releases a raft of labour market data, including average weekly earnings and unemployment rate numbers. Thursday could see further market shifts when the UK’s gross domestic product reading comes to light, which will mark the end of the UK’s data stream for the week.
EUR – Could there be a Czexit?
– There were murmurs of the threat of disruption in the Czech Republic as political parties discussed the laws surrounding referendums – some believe if progress were to be made on the matter, there’s the opportunity for a ‘Czexit’.
– Eurozone industrial production shot to 5.2% on the year in December, far higher than the previous 3.7% reading and the 4.2% expected.
– Data also showed Eurozone gross domestic product growth remained at 2.7% on the year in the fourth quarter.
Tuesday could be an eventful day for the euro with the release of the highly influential German ZEW economic surveys, followed by the Eurozone consumer confidence number. Wednesday will continue with both German and Eurozone manufacturing, services, and composite purchasing managers’ indexes (PMI’s) out, ahead of Thursday’s publication of the European Central Bank’s (ECB’s) account of the January policy meeting.
USD – US consumer confidence jumps
– The US consumer price index came in higher than forecast at 2.1% in January (rather than 1.9% on the year, causing the dollar to drop on Wednesday. GBP/USD climbed by around 0.60% on the news as investors began to grow concerned high price pressures would result in an aggressive rate hike cycle from the Federal Reserve.
– The University of Michigan sentiment index came in at 99.9 in February – the second-highest level in 14 years. The data shows the recent swings in the stock market have been unable to rattle consumers.
This week may begin quite quietly for the US dollar with little economic data scheduled for release and US markets closed Monday 19th February. However, later in the week, a few pieces will be published, alongside the release of Wednesday’s Federal Open Market Committee (FOMC) meeting minutes. Investors will be looking closely to see if there are any hints on the path of monetary policy. Wednesday will also see the release of US manufacturing, services and home sales data, followed by the weekly jobless claims numbers on Thursday, alongside the January leading index, and crude oil inventories. The week will close with a few Federal Reserve officials speaking.
AUD – RBA meeting minutes ahead
– Last week, the Australian unemployment rate came in at 5.5% in January, down from 5.6%. Meanwhile, employment change numbers showed an increase of 16.0K, higher than the 15.0K forecast.
– The Aussie might feel the impact of the February Reserve Bank of Australia (RBA) meeting minutes due out on Tuesday. Additionally, the rest of the week will see Westpac’s leading index and Australian wage price index data reach the market.
NZD – Kiwi reaches four-month high
– Last week, New Zealand’s business manufacturing index rose to 55.6 in January, a notable upswing from December’s 51.1.
– The Kiwi managed to reach a four-month high towards the end of last week but has started this week softer.
– The week ahead has a few economic events which could create NZD movements such as the latest dairy auction and credit card and retail sales spending on Thursday.
CAD – Canadian inflation in focus
– Last week the Canadian dollar was able to maintain some gains against the US dollar, ending Thursday close to a 10-day high. However, despite making gains against the buck, the loonie sank to its lowest intraday trade level against the euro (CAD/EUR) since February 2016.
– Friday saw the CAD/USD exchange rate weaken as the greenback gained some ground and Canadian manufacturing data disappointed. Manufacturing sales slipped by -0.3% in December, rather than registering +0.3% growth as expected, after November’s 3.8%.
– Thursday will see the release of the Canadian retail sales number, while Friday will bring with it the latest Canadian inflation reading.
Disclaimer: This economic update is provided by FC Exchange a Global Reach Group Company, industry leaders in foreign exchange. Authorised affiliates are permitted to reuse content.
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