Morning Report: 7 March 2017

7th March 2017 By: Ranko Berich

To read this report in Spanish, click here. Para leer este reporte en Español, por favor presione aquí.

To contact us, please email or phone +44 20 3650 6320.

GBP.  Last week’s USD strength was again challenged by a number of G10 currencies yesterday, but sterling continued to struggle as this week’s budget and legislative wrangling over Article 50 activation remained in the news headlines. The House of Lords is expected to debate a further series of amendments to legislation enabling Theresa May to begin the process of leaving the European Union today, raising the prospect of further blows to the Government’s strategy and, possibly, increased political uncertainty. This morning’s Retail Sales Monitor from the British Retail Consortium showed sales contracting 0.4%, the second consecutive month of contraction. With prices set to rise further, consumer spending is likely to come under further pressure this year, and possibly become a drag on GDP growth. Today at 08:30 GMT Halifax will release its House Price Index.

EUR.  The euro also drifted lower against USD yesterday, but is showing some signs of a small rally this morning. Yesterday the Eurozone Sentix Investor Confidence Index, a survey of institutional investors and analysts, rose further into positives, leading the research company to conclude the eurozone economy was “buzzing” and the survey result was the most positive in 10 years. This morning’s data has been less positive: German Factory Orders contracted by 7.4% in January, the biggest fall since 2009, although December’s 5.2% expansion puts the drop in perspective to an extent. On a year on year basis, orders were still up more than 4%. Today at 10:00 GMT, revised eurozone Gross Domestic Product data will be released.

USD.  After closing last week with a big drop challenging its previous upwards trend, USD began to climb again yesterday. Monthly Factory Orders data showed a second strong month of increases in January, but in general the data calendar was thin and political developments, including healthcare reform and fresh immigration controls, remained in focus. One of the Trump administration’s top advisors, Peter Navarro, accused Germany of using euro membership as a means of gaining an unfair trade advantage. Navarro said that Germany was “one of the most difficult trade deficits that we are going to have to deal with”. Today at 13:30 GMT Trade Balance data will be released, followed at 15:00 GMT by IBD Economic Optimism survey results.

CAD.  The loonie was volatile yesterday, seeing some large price fluctuations in the afternoon before ultimately closing lower against the US Dollar. Today at 13:30 GMT Canada’s Trade Balance will be released, followed at 15:00 GMT by the Ivey Purchasing Managers’ Index.

UK news

FT: Downing Street warns peers over ‘bad’ Brexit deal. Number 10 puts pressure on Lords ahead of Article 50 vote on Tuesday. Theresa May is facing the prospect of a second defeat in the House of Lords over an amendment seeking a “meaningful” vote in parliament over the final terms of Britain’s exit from the EU. The House of Lords defied the prime minister last week, voting by an overwhelming majority to back an amendment to the government’s Brexit legislation that would guarantee the rights of EU citizens living in the UK.

Reuters: UK new car sales dip in February, pickup seen in March – SMMT. British new car registrations fell by an annual 0.3 percent to 83,115 units in February, driven down by weaker demand from individuals and companies, but sales are expected to pick up in March, a car industry body said on Monday. Private demand fell 4.4 percent to 36,018 units and business registrations declined 5.3 percent to 1,398 units. Fleet sales, typically to car rentals firms, rose 3.3 percent to 45,699 cars, the Society of Motor Manufacturers and Traders said.