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Following the strongest weekly performance of the USD for 8 months last week, it is the performance of its European peers, rather than its own, that will come into question towards the latter part of this week.
The European single currency is subject to the highest weekly event risk as the European Central Bank meet on Thursday to discuss monetary policy, under the spotlight even more than usual as investors seek any indication of potential tapering of its struggling QE programme. Investors look to be pricing in remarks as the Euro weakens against both GBP and USD.
Continued ‘hard’ Brexit fears playing on the Pound have been somewhat abated by comments from a prominent government lawyer that a parliamentary vote would be ‘very likely’ for the final approval of Britain’s EU exit at the first legal inquiry into the vote to leave the EU, however the jury is still very much out. Additionally, strong UK inflation data released Tuesday has seen the Pound hold firm against its peers after weeks of pressure culminated in the flash crash a fortnight ago, while strong Employment data released today provides yet more macro data for the pro-Brexit camp to show the UK economy is not sinking like the Titanic as some forecasts predicted.
Expectations of a US rate hike have been somewhat dampened after dovish comments from US Federal Reserve Chair and Vice Chair last week, although yesterday’s consensus-meeting CPI data has helped to cement expectations of a hike before year end just above 60%. The release of the Fed’s Beige Book this evening could provide some insight into the potential overheating of the US economy (of which Chair Yellen announced she’s happy to tolerate to a degree) while Weekly jobs data released on Thursday will, as ever, be heavily scrutinised as hawks looks for some of the labour market slack to be reduced.
Key data this week (Sign up here to get our daily live macro-calendar)
UK Economic Announcements
09:30 Claimant Count
Intl Economic Announcements
03:00 GDP (CHN)
12:00 MBA Mortgage Applications (US)
13:30 Housing Starts & Building Permits (US)
15:30 Crude Oil Inventories (US)
19:00 Fed Beige Book (US)
—
UK Economic Announcements
09:30 Retail Sales
11:00 CBI Industrial Trends
Intl Economic Announcements
07:00 Producer Price Index (GER)
12:30 Building Permits (US)
12:45 ECB Interest Rate Decision (EZ)
13:30 Continuing & Initial Jobless Claims, Philly Fed (US)
15:00 Existing Home Sales (US)
—
UK Economic Announcements
09:30 Public Sector Net Borrowing
Intl Economic Announcements
15:00 Consumer Confidence (EZ)
Technicals
Technicals
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This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.
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