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Market News – 13 February 2017

GBP

Sterling edged higher this morning, adding to last week’s gains against the Euro, after better than expected manufacturing and trade data. Inflation adjusted consumer spending rose 0.4% in the year to January, sharply down from 2.5% in December, adding to signs that consumer spending is starting to lose momentum.

In a speech in Leeds last week, Kristin Forbes, an external member of the Bank of England’s Monetary Policy Committee, gave a strong indication that she is on the verge of voting to increase interest rates.

The Bank of England’s Chief Operating Office, Charlotte Hogg, has been appointed as the next deputy governor for markets and banking, where she will be responsible for the quantitative easing programme as well as the management of the Government’s foreign exchange reserves.

EUR

The Euro has been hit by nerves around an increase in political uncertainty across the Eurozone and the ongoing standoff in talks surrounding the Greek bailouts, with IMF chief Christine Lagarde expressing her own concerns. “I am worried as we all are, about the outcome of some of these elections,” Lagarde told an audience at the World Government Summit in Dubai yesterday.

Germany, France and the Netherlands will hold their own elections this year, with the uncertainty around the results causing volatility within the corridors of power. After the shock results of Brexit and Donald Trump becoming US President, the international community is bracing itself for any result.

French presidential hopeful Marine Le Pen, who has been calling the country to leave the Eurozone and give up the Euro has described the single currency as “a knife which the EU puts into the backs of the people.”

She also said that if the EU doesn’t transfer powers back to Paris, there will be a French exit from the union, or a so-called ‘Frexit.’

USD

President Trumps protectionism and potential trade wars are continuing to cause uncertainty and fear within global markets. One of the largest financers of the US government, Japan, culled it’s holding in December by the most in four years. However, this is not limited to the Japanese, with investors globally piling money into markets less exposed to Trump.

According to the Huffington Post, Donald Trump recently made a late-night call to his security advisor, Mike Flynn, to ask if a strong or weak Dollar is better for the US economy.

Rest of The World

The Canadian Dollar strengthened against the US Dollar last Friday as oil prices rose and domestic jobs surged.  48,300 jobs were added in the domestic market in January, “It’s another impressive read,” said Desjardins Senior Economist Jimmy Jean.

The Norwegian Krone hit its highest level against the Euro since early 2015, as higher oil prices have started to provide the economy with a much-needed boost.

Data This Week

Tuesday:

UK CPI (YoY Jan)

EU GDP (YoY Q4 Preliminary)

Wednesday:

ECB Non-monetary policy meeting

US CPI (YoY Jan)

US Fed Yellen’s speech

Thursday:

AUS Employment change

AUS Unemployment rate

Friday:

UK Retail Sales (MoM Jan)

US CFTC USD Net positions