ECB in no rush to abandon its easing-cycle
The Euro snapped its run of gains as the market was left disappointed with the dovish tone from the ECB. Despite the small upward revision in the ECB’s growth forecast. Comments suggest the central bank is in no rush to abandon its easing-cycle as ‘measures of underlying inflation remain subdued’ and have yet to show convincing signs of a sustained upward trend. In addition, they also kept the language that the program could be extended if required.
They have however mentioned that they are willing to expand its bond-buying programme if the current eurozone expansion sputters.
Pound Sterling – UK Markets
The Pound is steady against the Euro, now exchanging at €1.12. Sterling remains steady against the US Dollar, with the exchange rate keeping at $1.38.
The Pound compared edged higher against the US Dollar and the Euro this Friday during early trading, as markets concentrated on the January review of UK manufacturing and industrial production data, which are both due to come out this morning. Since the Brexit referendum of 2016, the two industries have taken on increased importance to the UK economy. Markets are expecting for the manufacturing production to have risen by 0.2% during the over the month, down from the 0.3% growth seen in December 2017.
An overall 1.5% rebound in the UK’s headline industrial production is expected by the markets.
Brexit negotiations risk stalling if Britain does not present a realistic solution for the future of the Irish border after London rejected an EU proposal last week, European Council President Donald Tusk said on Thursday.
US Dollar – US Markets
The Euro remains fairly steady against the US Dollar, exchanging at $1.23. The US Dollar Index (DXY), which measures the strength of the Dollar against six major competitor currencies, sits at 90.14.
The US Dollar further strengthened on the back of President Trump signing controversial orders imposing heavy tariffs on steel and aluminium. Tariffs of 25% are to be placed on steel and 10% on aluminium imported into the US.
Overnight President Donald Trump has agreed to meet with North Korean leader Kim Jong Un in a unprecedented encounter between two nations that only recently threatened to wipe each other out. More on this in the coming days.
The focus for markets today will be the US labour market statistics. US payrolls rose by a faster than expected 200k in January, but the real surprise was the acceleration in wage growth to 2.9%. On Wednesday we saw the ADP figure beat expectations giving the NFP some upside risk. The headline figure is expected to post another sizeable monthly increase of 200k and the unemployment rate is forecast to fall to a new near 18-year low of 4.0%.
The Fed’s next monetary policy meeting is less than two weeks away only adds to the interest.
Euro – European Markets
The Euro remains steady against the Pound, with the exchange rate set at £0.89.
Germany has seen a drop in DAX 30 Index, which is the benchmark index for the German equity market. DAX decreased by 53 points to 12301 this Friday from 12356 in the previous trading session.
In response to the US President Donald Trump’s import tariffs signing, the European Union Trade Commissioner Cecilia Malmstrom has said that she does not see why EU should be part of the new deal, since the EU poses no threat to the US’s internal security or job market. The commissioner is also still sticking by her previous response on Wednesday, where she told the Trump government that the EU would retaliate to the new import tariffs by introducing taxes on various consumer goods, such as American Bourbon, Levi’s jeans and Harley Davidson.
Other Currencies – Highlights
The Sterling has seen a slight drop against the Australian Dollar, with the exchange rate at 1.76 AUD.
The Pound holds steady against the Japanese Yen, which now stands at 147.37¥.
The tension between the US and Asian markets remain, port import tariff threats. Japan and China have expressed complete opposition and said that such move would cause a big impact to the countries’ close bilateral ties and trust. In the meantime South Kora said that it may take the opposition further and file a complaint to the World Trade Organisation.