Morning Report: 31 January 2017

31st January 2017 By: Ranko Berich

GBP.  Sterling weakened although it was somewhat out of the spotlight yesterday, with no headline data releases and news stories focussing on political wrangling over Donald Trump’s invitation for a state visit. Early this morning the GfK Consumer Confidence Index was released, indicating that consumers were pessimistic overall about the direction of economic circumstances. The UK data calendar starts in earnest today at 09:30 GMT, with the release of Money Supply data from the Bank of England.

EUR.  The euro enjoy a sharp burst of strength yesterday that it is still holding on to as of this morning, after the European Central Bank’s Ewald Nowotny made statements that seemed to imply that the ECB will reassess the relevance of its quantitative easing programme in June. The ECB’s bond buying programme and loose monetary policy is meeting strong opposition in Germany, which is experiencing high inflation and a tight labour market, unlike much of the rest of the eurozone which, arguably, still has macroeconomic conditions that justify the ECB’s policy. Germany’s Consumer Price Index fell 0.6% month on month in January, after several months of strong expansion. Today at 10:00 GMT, eurozone Consumer Price Index inflation will be released alongside Gross Domestic Product.

USD.  USD managed to eke out some gains versus sterling yesterday but was not so resilient against the euro, amid escalating drama surrounding President Trump’s selective travel bans. The acting US attorney-general, Sally Yates was dismissed by the President, after she ordered subordinates at the Department of Justice not to defend the ban in courts. A White House statement described Ms Yates as “Very weak on illegal immigration”. In the meantime, Core Personal Consumption Expenditures rose 0.5% month on month in December, signalling a likely strong start to the year in 2017 for consumer price pressure. Today at 14:45 GMT the Chicago Purchasing Managers’ Index will be released, followed at 15:00 by CB Consumer Confidence.

CAD.  The loonie opened the week under heavy sell pressure, but then strengthened sharply before paring its gains slightly later in the afternoon. Headline economic data will be released today in the form of Gross Domestic Product and price indices for Raw Materials and Industrial Products, at 13:30 GMT. Bank of Canada Governor Stephen Poloz will speak at 22:35 GMT.

UK news

Trump fires acting attorney-general for opposing travel ban – FT Sally Yates had ordered DoJ subordinates not to defend president’s policy in court. Donald Trump fired the acting attorney-general on Monday night for opposing his controversial travel ban, as the new president faced growing protests against the restrictions from within US government the and a rebuke from Barack Obama. The sacking of Sally Yates, an Obama administration appointee, came after she ordered subordinates at the Department of Justice not to defend Mr Trump’s policy in court. In a sharply-worded statement, the White House said Ms Yates had “betrayed the Department of Justice” and accused her of being “weak on borders and very weak on illegal immigration.”

MPs begin two-day debate on Brexit bill – FT Prime minister expects to easily win approval after Labour ordered to support her. MPs will today begin two days of debate on the Brexit bill that will give Theresa May the authority to invoke Article 50 of the Lisbon treaty and begin the two year EU exit process. Mrs May is aiming to rush the bill through parliament by March 7, allowing her to formally announce Britain’s intention to leave the EU at a European summit a few days later. The prime minister expects to easily win parliamentary approval for the bill, after Labour leader Jeremy Corbyn ordered his party to support it.