A Quiet Start to The Week
The global economic calendar is quiet today. In the Eurozone, the just released data showed that the region’s Sentix investor confidence index declined in February. Meanwhile, German factory orders surged to an over 2-year high level in December. Later in the day, the European Central Bank President, Mario Draghi, is scheduled to testify before the European Parliament in Brussels.
The UK data docket remains empty for today. Thus, investors will continue to focus on any developments around the Article 50 trigger. In the US, labour market conditions index is up for release and the Federal Reserve (Fed) Bank of Philadelphia President, Patrick Harker is set to speak at a conference in San Diego later today.
Pound Sterling – UK Markets
The Pound is trading lower against the US Dollar and higher against the shared currency this morning. UK’s economic data docket is empty today with no data points up for release. Looking ahead this week, investors will be keeping tabs on a few important British economic reports namely, manufacturing and industrial production, trade balance data and construction output along with NIESR’s gross domestic product estimate for 3 months ended January. The crucial event for this week is a 3-day Parliamentary debate beginning today concerning the Brexit Bill and a following vote in the House of Commons.
On Friday, Sterling weakened against the greenback and the common currency, amid disappointing services data released in the UK. The nation’s services activity slowed for the first time in four months in January, as firms struggled with sharply rising costs in more than five years. During the previous week, the Bank of England stood pat on its monetary policy decision and upgraded UK’s economic growth forecasts for current and next year.
US Dollar – US Markets
The US Dollar ended on the back foot against most of its major peers on Friday, after the latest US jobs report showed a smaller than expected rise in wages for January, suggesting there is still some slack in the nation’s labour market that would keep inflation in check. Figures indicated that job creation in the US surged in January, as construction firms and retailers ramped up hiring during the period. However, the cooling in wage growth sends an ambiguous signal about the likelihood of more near term interest rate increases by the Fed. The Fed, which raised rates in December, has forecast three rate increases for this year. So, the latest jobs data has handed the administration under the newly elected US President, Donald Trump both a head start and a challenge as it seeks to boost the nation’s economy.
The greenback has managed to gain strength against the Euro and Sterling this morning. On the data release front, the US data calendar only contains the labour market conditions index today.
Euro – European Markets
The shared currency is trading lower against the US Dollar and the Pound this morning. The just out data showed that the Eurozone’s Sentix investor confidence index dropped in February. In other economic news, seasonally adjusted German factory orders rebounded at its fastest pace in over 2 years in December, backed by a surge in investment goods demand. On the other hand, the nation’s construction PMI registered a decline for January. Later in the day, the ECB President, Mario Draghi, is set to deliver his regular testimony at the European Parliament in Brussels. He might face questions on the central bank’s policy path, including when it might start to taper, or wind down its quantitative easing programme.
On Friday, data showed that the Eurozone’s retail sales unexpectedly dropped in December, indicating that higher energy prices may be putting curbs on consumer spending. On an annual basis, the region recorded its weakest retail sales growth in 3 months. Meanwhile, preliminary figures showed that annual Italian consumer prices accelerated at the start of this year.
Other Currencies – Highlights
The Japanese Yen is trading on a stronger footing against the US Dollar this morning, rising higher for the fourth consecutive sessions. On the data front, Japan’s annual labour cash earnings advanced at a slower pace in December. Going ahead this week, there are a bunch of economic releases scheduled in Japan, namely coincident and leading indices, trade balance data, machine tool orders and tertiary industry index. Moreover, the Bank of Japan (BoJ) will release its summary of opinions for its January monetary policy meeting, wherein the central bank maintained its current stance on stimulus measures. Traders will keep a track on the report for more cues on the BoJ’s forecast on inflation and economic growth for 2017.
On Friday, Japan’s Markit services PMI expanded at a slower pace in January. However, it managed to stay in expansionary territory for the fourth consecutive month. Meanwhile, the outlook for production from the nation’s services sector remains positive throughout this year, as the business sentiment segment advanced to its strongest level in 9 months.