Morning Report: 09 March 2015

9th March 2015 By: Admin

GBP Sterling offered little resistance last week against a rampant US dollar, but did strengthen against the collapsing euro. The Bank of England’s Consumer Inflation Expectations survey for the first quarter of 2015 was released, showing falling inflation expectations, a worrying development for the BoE which must consider not only headline inflation but also expectations, which influenced spending and investment behaviour. This will be a slow week for sterling in terms of data releases, although Manufacturing Production data will be released tomorrow at 09:30 GMT.

EUR The euro’s fall last week was nothing short of a collapse, with both EURGBP and EURUSD plumbing multi-year lows. The eurozone’s Gross Domestic Product grew 0.3% in the fourth quarter, a slight improvement from the stagnation seen earlier in the year. Looking ahead to this week, a relatively slow week of data releases mean that all eyes will turn to the initial impacts of the ECB’s quantitative easing program. The ECB has promised 60 billion euros per month of asset purchases, consisting of bonds issued by government large European institutions and yields look set to fall further across the eurozone as a result. On Thursday, German and French Consumer Price Index inflation data will be released in the morning.

USD Driven by low oil prices, hawkish central bank sentiment and strong economic data, USD had already had a good week before the release of Friday’s Non-Farm Payrolls report. The report itself was surprisingly positive, and triggered a bout of overwhelming USD strength. No less than 295,000 jobs were created in February, far more than expected. Wages continued to tick up, and unemployment fell to just 5.5%. This week’s key event for USD will be the release of Retail Sales data, on Thursday at 13:30 GMT. Today at 14:00 GMT, the Labour Market Conditions Index will be released, an amalgamation of indicators designed to track the health of employment. Given the last three months of extremely strong growth in the labour market, an increase in the index is expected.

CAD Friday’s US payrolls data drove USDCAD higher once again, after CAD had spent the last couple of days rallying.  Friday saw the release of Building Permits data, which showed a collapse in new permits, as well as Canada’s Trade Balance and Labour Productivity data. The economy posted a 2.5 billion trade deficit, as energy prices continued to plummet. Labour productivity fell slightly, indicating a marginal decrease in labour efficiency in the economy. The key release this week for CAD will be Employment data, out on Friday at 13:30 GMT.

UK News

  • Reuters. London financial sector jobs jump 17 percent in February: Jobs in London’s financial services sector rose 17 percent in February compared to a year ago, buoyed by strong equity markets around the globe and improving economic sentiment, even as British banks continued to cut headcount.
  • Telegraph. Falling oil price encourages Britain to splash out: The falling cost of petrol, the weakening of the euro, and an increase in wages has encouraged British consumers to start splashing out on holidays and restaurant meals according to new spending data.