May May Delay Brexit Day?14th February 2019
Bank of England (BoE) Governor Mark Carney avoided additional dovish comments in his lunchtime speech, encouraging the Sterling buyers and allowing the Pound to bounce back from three-week lows against the Dollar. The market will now look to headline inflation figures to determine near-term Cable (GBPUSD) movements, which will be released this morning.
Theresa May’s update to parliament consisted of a request for more time to negotiate a fresh deal with EU leaders. There was also a denial that voting on a renewed Brexit plan was promised this week, encouraging soft Brexit expectations.
Headline CPI year-on-year is expected to drop to 1.9% from 2.1% previously and the monthly figure may print -0.7%, down from +0.2% previously. The data looks set to convey weakness in the UK economy following the weak GDP data, and there is an obvious risk to Sterling sentiment although delayed and/or soft Brexit speculation does limit the downside.
With the USD index (which tracks the Greenback vs a basket of its main rivals) recording fresh yearly highs around 97.20 yesterday, the index came under increasing selling pressure in response to rising optimism over a positive outcome from the US-China trade talks. An extension of the ninety-day truce deadline appears likely, according to the market consensus. In addition, a probable agreement regarding the US budget has also bolstered the sentiment, which in turn has been detrimental to the Dollar.
Today, US inflation figures gauged by the CPI for the month of January will be the salient event along with speeches by FOMC’s Bostic and Harker and the weekly report on US crude oil supplies by the EIA.
EURUSD saw some gains yesterday and this morning, with most of the recovery coming from positive news surrounding the US and China’s trade deal. Political concerns in the Eurozone are ever-present, with the ‘yellow-vests’ dispute in France and tensions in Italy.
Ahead of key EU parliamentary votes this year, political tensions are not what the Eurozone needs right now, with tough growth conditions affecting most of the region. Many agree that the market has priced in the European Central Bank’s (ECB) expected delay to the start of the tightening cycle.
Data today sees RPI and CPI numbers out of the UK, before the German thirty-year bond auction and the EU’s industrial production numbers. As with most days, news over Brexit and geopolitical announcements are expected to have more of an impact on the market than data.
Data to watch:
01:00 NZD Monetary Policy Statement
01:00 NZD RBNZ Rate Statement
01:00 NZD RBNZ Interest Rate Decision
02:00 NZD RBNZ Press Conference
09:30 GBP Retail Price Index (YoY) (Jan)
09:30 GBP Retail Price Index (MoM) (Jan)
09:30 GBP Producer Price Index – Input (YoY) n.s.a (Jan)
09:30 GBP PPI Core Output (YoY) n.s.a (Jan)
09:30 GBP Core Consumer Price Index (YoY) (Jan)
09:30 GBP Consumer Price Index (YoY) (Jan)
09:30 GBP Consumer Price Index (MoM) (Jan)
10:00 EUR Industrial Production s.a. (MoM) (Dec)
12:15 USD Fed’s Bostic speech
13:30 USD Consumer Price Index (MoM) (Jan)
13:30 USD Consumer Price Index Core s.a (Jan)
13:30 USD Consumer Price Index (YoY) (Jan)
13:30 USD Consumer Price Index Ex Food & Energy (YoY) (Jan)
13:30 USD Consumer Price Index Ex Food & Energy (MoM) (Jan)
13:50 USD Fed’s Mester speech
19:00 USD Monthly Budget Statement (Dec)
19:10 NZD RBNZ’s Governor Orr speech
23:50 JPY Fross Domestic Product (QoQ) (Q4)
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