- Hints of lower US rates weaken USD
- EU and Canadian GDP are the day’s highlights
After Monday’s barren data diary, things picked up overnight with the Chinese Manufacturing Sector Purchasing Managers' Index (PMI). Perhaps, ‘picked up’ is the wrong expression, because that data was worse than expected and down on last month’s figures. That put pressure on the currencies of China’s supplier nations.
The US Dollar has given up some of its gains and allowed the Pound to push back above $1.29 after Larry Kudlow talked about the Federal Reserve having scope to cut their base interest rate. Now, he is an advisor to the President, so he has no say in the matter but it is a hint as to the thinking at 1600 Pennsylvania Avenue.
Sterling is pretty static this morning after consumer confidence showed no improvement over last month’s pessimism. There is a distinct lack of UK data today, so other than a speech from one member of the Bank of England’s rate setting committee, there is little for Sterling traders to focus on. Hence, the Pound is likely to remain largely inert.
There is plenty going on in the EU though. We already had a flat reading on German consumer confidence inflation data. That was a tad worse than expected and that adds pressure to the European Central Bank (ECB), who are facing increasing calls for looser monetary policy. That’s tricky when your base rate is already zero but further policies to increase the money supply may have to follow. This morning brings further data from a number of Eurozone countries. Most interestingly, economic growth data will be published for France and the Eurozone as a whole. The forecast is for 1.1% growth on the year for the Eurozone, but there are rumours of a poorer data set than that, so be ready for a fall in the value of the Euro if that happens. Just for comparison, UK Gross Domestic Product (GDP) grew 1.4% on the year to December.
Sticking with that theme, this afternoon brings Canadian GDP growth too. That is forecast to match the UK figure at 1.4% to February. If so, the Canadian Dollar will sit tight, but anything untoward will have an impact. Be prepared. We will also hear from the Governor of the Bank of Canada, so volatility may ensue.
US data is limited to sentiment indices for both the business and consumer sectors plus housing market data for pending home sales. All are of interest but the China versus US trade negotiations are causing more vexation in trading rooms around the globe. We watch that with interest.
Overnight tonight we will get employment data from New Zealand and we expect the unemployment rate to have fallen to 4.2%, which is a tad higher than the low we saw in November, but still exceptionally good for New Zealand. If we see that ramp up wages growth, the Reserve Bank of New Zealand (RBNZ) will be under increasing pressure to raise their base rate.
Whale of a time
And a fisherman in Norway has filmed a Beluga Whale he saw off the Finnmarkkysten coast. Not unusual, you might think, but this one had a harness on it. Some are speculating that it may have been trained by the Russian Navy or may still be a member of their crew; who knows? Either way, the whale came close enough to his boat for the fisherman to release the buckle and Vlad the Beluga was free. Yay! I definitely feel a movie is apt here, but I am struggling with a title.