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May delays meaningful vote until 12th March

US DOLLAR

The Dollar Index edged lower last week, hitting a two-week low on Wednesday at 96.29 but has started this week around 96.4. There was some mild volatility after the FOMC minutes while a pretty dismal retail sales report provided a weight and prompted a number of banks to trim their Q1 GDP forecasts.

Looking ahead, we await US housing data and consumer confidence tomorrow plus comments from Fed Chair Powell who appears before Congress. Durable goods are due on Wednesday, followed by Q4 GDP on Thursday and ISM manufacturing on Friday.

STERLING

The probability has risen that Theresa May will need to request an extension of around 2-3 months to the March deadline and the EU are apparently willing to grant this, as long as the PM can deliver a result. A big hurdle to extending beyond this is the European elections that are held in May which the UK would be required to take part in. Both the PM and EU would hope to avoid the UK’s participation in these elections.

GBP/USD has flirted with 1.31 this morning as Sterling inched higher after weekend press reports suggested Brexit would be delayed. This came as UK Prime Minister Theresa May confirmed the meaningful vote would not take place this week.

A handful of Bank of England officials including Governor Carney will speak tomorrow at the Inflation Report hearings. Manufacturing PMI data is due on Friday.

EURO

The Euro saw a net gain last week having risen sharply on Tuesday before gains were trimmed on Friday by soft German IFO data. There was little reaction to Thursday’s ECB minutes although we saw some mild selling pressure after the ECB’s Nowotny said he does not see the need for liquidity. EUR/USD is flat this morning at around $1.1350.

Euro Zone confidence indicators are due on Wednesday, followed by German CPI on Thursday and Euro Zone CPI on Friday.

JAPANESE YEN

Weaker-than-expected trade data and dovish remarks from Bank of Japan Governor Kuroda kept the Yen under pressure last week. USD/JPY was relatively range bound with the pair contained in the 110.50-111.00 for most of the week.

Looking ahead, industrial production and retail sales figures are due on Thursday followed by Tokyo CPI, unemployment and manufacturing PMI on Friday.

SWISS FRANC

Moves in the Swiss Franc were relatively muted last week with EUR/CHF contained between 1.1320 – 1.1380. Domestic impulses were limited with no macro data or central bank impulses to note.

Swiss ZEW data is out on Wednesday followed by Q4 GDP on Thursday and retail sales and PMI on Friday.

AUSTRALIAN DOLLAR

The Australian Dollar has begun the trading week as one of the strongest G10 currencies, boosted by news that US President Trump has postponed the March tariff deadline for trade talks with China.

The Antipodean currency was choppy last week having rallied on domestic jobs data before falling on a dovish RBA call from Westpac.

New home sales and manufacturing PMI are out on Thursday.

CANADIAN DOLLAR

USD/CAD fell to a fresh three-week low this morning at 1.3122. The Dollar strengthened last week as rising oil prices continue to provide support although comments from Bank of Canada Governor Poloz also played their part after he reaffirmed the need to moves rates up to neutral over time.

CPI data on Wednesday, producer prices on Thursday and GDP on Friday are the only releases of note this week.

SWEDISH KRONA

The Swedish Krona weakened further last week with EUR/SEK topping out at six-month high on Thursday at 10.6325 after weaker-than-expected CPI data released earlier in the week. The pair pulled back on Friday however after hawkish Riksbank minutes and has continued lower this morning to below 10.58.

NORWEGIAN KRONE

The Norwegian Krone has been relatively steady of late with EUR/NOK contained within the 9.7-9.8 since February 13th. Domestic impulses were limited last week with no macro data or central bank speakers to note although oil prices continue to provide support as they trade at multi-month highs.

This week brings retail sales and unemployment figures, both due on Wednesday, followed by manufacturing PMI on Friday.

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