Morning Report: 12 February 2018

12th February 2018 By: Ranko Berich

GBP A disappointing Trade Balance and critical comments by the European Union’s chief Brexit Negotiator Michel Barnier were enough to let the let the sterling bears loose on Friday, and the pound gave back its gains from Thursday’s hawkish Bank of England statements. Over the weekend Visa released its UK spending index, which showed a drop in January for the first time in five years – a bad omen for Friday’s official Retail Sales data. Other important releases for this week are the Producer and Consumer Price Indices on Tuesday, which will tell the Bank of England how patient they can be with their planned rate hikes. On Wednesday Theresa May will deliver her “Road to Brexit” speech, which may provide the clarity Barnier is waiting for on the UK stance in the Brexit trade negotiations.

USD The dollar index made some minor gains on Friday, while stocks found a modicum of stability after a volatile week, and has made some mild gains this morning. Politics in the United States remains mired in controversy after Democrats and President Trump continued to trade barbs through statements and on Twitter. This week is jam packed with dollar relevant data, with CPI on Wednesday together with Retail Sales, PPI on Thursday and several sentiment surveys scattered across the week.

EUR Friday was mixed for the single currency; gains against sterling, weakness against a handful of emerging market currencies and flat versus USD. The German coalition agreement is now waiting for its final hurdle; as an SPD membership vote on the 4th of March can still veto the deal and send Germany back to the ballots. Wednesday promises to be the most interesting day of the week for the euro datawise, with Final German CPI and the second reading of Q4 Gross Domestic Product.

CAD Friday was mixed for the single currency; gains against sterling, weakness against a handful of emerging market currencies and flat versus USD. The German coalition agreement is now waiting for its final hurdle; as an SPD membership vote on the 4th of March can still veto the deal and send Germany back to the ballots. Wednesday promises to be the most interesting day of the week for the euro datawise, with Final German CPI and the second reading of Q4 Gross Domestic Product.

UK news

  • Financial Times: Trump unleashes tweet barrage over Russia probe memo. US president says Democrats are blaming him for not releasing document defending FBI
  • Reuters: DUBLIN/LONDON: British, Irish PMs to visit Northern Ireland, urging end to political crisis. British Prime Minister Theresa May and Irish leader Leo Varadkar will meet with Northern Ireland’s main political parties in Belfast on Monday to urge the restoration of the province’s devolved administration.