Morning Report: 30 March 2016

30th March 2016 By: Ranko Berich

GBP After an impressive start to the week, sterling is close to highs for the month against USD. The release of the Bank of England’s Financial Policy Committee’s latest assessment of financial stability risks to the economy passed largely without incident for the pound. Brexit risk remained a major theme, however, as with the Monetary Policy Committee’s own assessment of risks to the economy. The FPC’s specific concern was that a potential Brexit would raise borrowing costs, and worsen the risks created by the UK’s high level of capital inflows and large current account deficit. Today at 11:05 GMT, research company GfK will release its Consumer Confidence survey index.

EUR The euro fell overnight against most of the G10 currencies, with USD the notable exception. Despite the most recent moves in EURUSD ostensibly being event driven, the pair is beginning to trend upwards strongly. Today’s main data releases will be the German Consumer Price Index, which will as always be released on a regional basis throughout the morning, ahead of the overall Germany CPI at 13:00 BST. Business and Consumer Confidence surveys will be released at 10:00 GMT.

USD USD weakened sharply yesterday after a speech from Federal Reserve Chair Janet Yellen. Yellen’s very dovish tone played down any possibility of imminent interest rate hikes, contrasting with comments from other Federal Open Market Committee members last week. Yellen argued that although the labour market keeps improving, it still was too soon to confirm if the recent pickup in core inflation would prove durable. After her speech global equities rallied and US treasuries yields, which move inversely to its price, fell. Today ADP’s private estimate of Friday’s Non-Farm Payroll figure will be released at 13:15 BST, and is expected to remain near 200,000 jobs created.

CAD The loonie advanced again yesterday, propelled by US central banker Yellen’s very dovish tone causing USD to fall significantly, while sending crude oil prices more than 1.5% up from the daily lows. Amid the Fed’s cautious tone and volatile crude oil prices recently, CAD’s immediate future is, at the very least, uncertain. Today’s crude oil inventories data release in the US will shed some light on the progress of the global crude oil glut. Bank of Canada’s Deputy Governor Lynn Patterson is due to speak about commodity prices at 7.35 BST.

UK News

  • Financial Times. Search for Tata UK buyer begins. The race has begun to find a private buyer for Tata Steel UK after Britain’s biggest steel manufacturer was put up for sale by its Indian parent company late on Tuesday night. Minister says government could hold Port Talbot plant open while private buyer sought.
  • Financial Times. Remain campaign woos ‘Instagram generation’. Before last year’s general election, politicians focused on chasing the votes of hard-working families. Now in the run-up to European referendum, the campaign to keep Britain in the EU is setting its sights on a different demographic. Opinion polls consistently suggest that Euroscepticism begins at 40. About two-thirds of voters under that age back staying in the EU, while a narrower majority of older people back leaving the EU.