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Sterling up but lack of data leaves it vulnerable to Brexit comments

Published: Tuesday 27 February 2018

  • New Zealand trade deficit better than forecast
  • Raft of US data later today
​​By David Johnson

Having spent two hours getting five miles down the road, giving up and turning back to home, I can certify that Britain doesn’t cope well with four inches of snow. Impassable roads caused by inexperienced car drivers and ambitious lorry drivers are no way to start a Tuesday.

But the world carries on and the markets are no exception…

New Zealand trade balance surprise strengthens the NZ Dollar

Monday was a little lacking in excitement, but New Zealand’s Trade Balance, released overnight, got things rolling again. The consensus forecast was that their trade deficit was going to significantly widen, but the actual number was a deficit of just NZ$566 million. That was a quarter of the forecast level and, understandably, the New Zealand Dollar strengthened on the news.

European business sentiment forecast to fall

This morning brings a veritable smorgasbord of Eurozone data, but the highlights are the Business and Consumer Confidence Indices. Not much change is expected from the Consumer Index, but the business climate and sentiment indices are expected to show poorer results than we have seen previously and the Euro is likely to suffer on the back of that.  

Sterling vulnerable to Brexit commentary

The Sterling – Euro exchange rate has recovered somewhat after a few days of copious amounts of Brexit comment. There is almost no hard data for the UK economy today, but that won’t stop politicians making waves, so be ready for that.

Raft of US data expected this afternoon

There is though, a fair amount of US data in the form of the Trade Balance, Durable Goods Orders, Federal Reserve speakers and housing market data. If that doesn’t get traders active, I don’t know what would. Maybe they only needed to be reassured that their Commander in Chief would run into a live firing situation without a weapon. Good to know.

What to look out for…

There is a smattering of Japanese data overnight tonight, as well as UK Consumer Confidence and the British Retail Consortium Shop Price Index. So there will be GBP volatility overnight as well as volatility for the Japanese Yen.

Cold Comfort

And the cold weather has caused another casualty. The Dartmoor Union Inn, in the West Country, has had to postpone its charity snail race, because the cold weather has made all the competitors too sluggish (the pun was unintended but I am keeping it in). The race will still go ahead, but only when the weather improves.

“Mummy... Daddy, where did I come from?" seven-year-old Rachael asks.

It is a moment for which her parents have carefully prepared. They take her into the living room, get out several books and, at great length, they explain all they think she should know about love, attraction and reproduction. Then they both sit back and smile contentedly. "Does that answer your question?" the mum asks.

"Not really," the little girl says. My friend Mandy said she came from Leeds. Your story is much more complicated."

Today's Major Economic Releases

Market BST Data/Event Previous Expected
EUR 09:00 EU: M3 Money Supply 4.6% 4.6%
USD 13:30 US: Durable Goods Orders 2.8% -2.4%
USD 13:30 US: Core Durable Goods Order 0.7% 0.4%
USD 13:30 Federal Chair Powell Testifies    
USD 15:00 US: Conference Board Consumer Confidence  125.4 126.2
CAD 21:00 Canada: Annual Budget Release    

For more information, infographics and the latest currency insights, visit www.halofinancial.com/news