Morning Report: 10 March 2015

10th March 2015 By: Ranko Berich

GBP Sterling finally managed to staunch its losses against the US dollar yesterday and even managed to mount somewhat of a rally. Early this morning the British Retail Consortium released its Retail Sales Monitor, which showed that same store sales had expanded 0.2% on a like for like basis since February 2014. On an accumulated or total basis, sales were up a healthy 1.7%. Overall, the retail sector in the UK continues to expand, despite struggling with intense price competition and a sale-heavy environment. Later today at 14:35 GMT Bank of England Governor Mark Carney will testify to the Lords Economic Affairs Committee. In the evening at 18:30 his Monetary Policy Committee colleague Ian McCafferty will speak at Durham University Business School.

EUR Euro weakness was the main feature of financial markets yesterday as the European Central Bank’s quantitative easing programme kicked in. The ECB began to purchase government debt including that of France, Germany and the Netherlands. Yields on fixed income securities fell across the eurozone as a result. Business optimism has already begun to pick up as a result of the ECB’s actions, however. Research company Sentix’s Investor Confidence Index rose to 18.6, indicating a strong bounce back in economic activity was expected by the surveyed investors. In the meantime, Germany’s Trade Balance remained in surplus while exports soared, helped along by the weak euro. The ECB’s shopping spree continues today, meaning that as yields fall more volatility can be expected.

USD The United States dollar continued to bask in the glow of Friday’s non-farms report, performing strongly for the most part while finally hitting a spot of resistance from sterling. The Labour Market Conditions Index read 4.0, indicating expansion in the 19 indicators that comprise the index. Today at 14:00 GMT the Job Openings and Labour Turnover Summary will be released at the same time as Wholesale Inventories data. The JOLTS summary has been showing an increasing number of job openings in recent months, a trend that is expected to continue.

CAD Loonie was relatively stable yesterday, appearing to staunch its losses after getting hammered on Friday. The only data released were Housing Starts, which showed a slight dip in new housing projects in February. No data is out until Thursday, meaning that CAD will trade off momentum and developments elsewhere, especially in the crucial oil markets.

UK News

  • FT. Osborne finds austerity breathing space: High quality global journalism requires investment. George Osborne is looking at relaxing the Treasury’s assumption of deep austerity over the next five years in next week’s Budget, countering Labour’s claim that his “extreme” policies would take state spending back to the levels of the 1930s.
  • Guardian. Young and low-paid workers in UK ‘most vulnerable to interest rate rise’: Report says young adults suffered 36% drop in savings since 2005 while top 20% of earners ‘more financially secure today than going into the downturn’
  • Reuters. UK retail sales growth holds steady in February – BRC: British retail spending kept shops busy in what is normally a quiet month in February, suggesting a plunge in inflation has given consumers a boost, an industry survey showed on Tuesday.