Trade the Key Topic for Trump and May’s First Meeting
British Prime Minister Theresa May meets US President Donald Trump at the White House today. May is the first foreign leader to meet the new US President in Washington since he took office and a bilateral trade deal between the two countries will be high on her agenda. Both leaders have taken fresh steps to reform their international relations, particularly through trade. Britain’s pending exit from the European Union (EU) and Trump’s withdrawal from the Trans-Pacific Partnership will necessitate negotiating new trade agreements across the globe.
Meanwhile, in the Eurozone, data showed that German import prices surpassed market expectations in December. Later today in the US, flash reading of Q4 gross domestic product (GDP) data will attract significant attention.
Pound Sterling – UK Markets
The Pound is trading on a weaker footing against the US Dollar and the Euro this morning. The British economic calendar is data empty today. Going ahead in the day, investors will keep an eye on UK PM, Theresa May and newly sworn-in US President, Donald Trump’s meeting for further cues on the relationship between the two countries. Market participants now shift focus to next week’s important event i.e. the Bank of England’s interest rate decision along with the meeting minutes.
Sterling weakened against the greenback yesterday, reversing an initial surge, which saw the Pound rise to its highest level in 7 weeks, on the back of upbeat GDP numbers. The official figures revealed that UK’s economic growth accelerated more than expected in the 3 months to December, amid strength in the nation’s services sector. Additionally, the CBI indicated that UK’s monthly retail sales surprisingly dropped in January, weighed down by a major decline in grocery sales.
US Dollar – US Markets
Yesterday, the greenback ended higher against its major counterparts, following the release of robust economic data prints from the US. Preliminary reading of Markit services PMI blew past market expectations for January, expanding at its fastest pace in a year, while the Conference Board leading indicator surged in December. Meanwhile, the US Chicago Fed national activity index rebounded in December and the Kansas Fed manufacturing activity index advanced in January. On the flipside, the number of Americans applying for unemployment benefits increased last week. Nevertheless, it remained at a level consistent with a healthy labour market. Further, purchases of new homes in the nation plunged to a 10-month low in December, after registering 3 consecutive months of solid gains.
Today, market participants will keep a close watch on flash estimates of the US GDP data for 4Q 2016 along with durable goods orders data. In addition to this, a meeting between the US President Donald Trump and British Prime Minister Theresa May is also scheduled later in the day.
Euro – European Markets
This morning, the shared currency is trading higher against its major peers, after figures from the Federal Statistical Office showed that German import price index advanced in December. Another boost came in the form of French consumer confidence index that advanced to a 9-year high level in January. Meanwhile, Italian business confidence came in above estimates for January. However, the nation’s consumer confidence index dropped more than anticipated for the same month. In other news, Spanish retail sales surprisingly declined in December. Going ahead, market participants will witness a plethora of economic releases scheduled next week, which includes the Eurozone’s consumer and industrial confidence index as well as preliminary reading of German consumer inflation data for January.
Yesterday the Euro ended weaker against the greenback and the Pound. Data indicated that seasonally adjusted Italian retail sales retreated for November. Meanwhile, market research group GfK reported that German consumer sentiment is set to strengthen in February.
Other Currencies – Highlights
The Japanese Yen is trading in negative territory against the greenback this morning. Data released earlier in the session showed that Japan’s national consumer price index (CPI) came in above expectations for December, but still remains extremely fragile. Meanwhile, the nation’s core consumer prices dropped for the 10th consecutive month, underscoring that the country is still mired in deflation despite the Bank of Japan's drastic monetary easing measures. Japan’s Prime Minister, Shinzo Abe’s mission to lift the nation out of the deflationary spiral that has plagued its economy for two decades has now suffered yet another setback.
Earlier in the week, data indicated that Japan recorded a trade surplus for December, helped by cheaper oil imports. Further, imports fell more than expected in December, while exports rose more than anticipated. Going ahead, market participants would focus on Japan’s retail trade and employment data along with industrial production figures, scheduled to release next week for further direction in the
US Dollar – Japanese Yen currency pair.