GBP
Sterling ended the week almost exactly where it started, trading within a tight 100 point range for the most part, as the FX market continues to sit as a bystander to elevated levels of volatility elsewhere. Last week’s quiet data calendar did little to inject any excitement into GBP pairs, while yet more unclear guidance from the Bank of England as to future policy shifts left market participants rather lost. Looking ahead, a busy data docket awaits this week, including the latest reads on employment (Tues), inflation (Weds), and retail sales (Fri). All of the data should solidify the case for a further 25bps Bank Rate hike in March, though this is already priced in by money markets, hence GBP upside may be limited.
EUR
The common currency’s recent rally, driven by a hawkish repricing of ECB policy expectations, ran out of steam last week, with the EUR failing to climb above the $1.15 handle, and pulling back. Again, as with the GBP, a lack of explicitly hawkish comments from ECB policymakers, coupled with a limited slate of economic data gave the EUR little fuel to power a further rally. This week, the data calendar is also rather quiet, with only Friday’s consumer confidence report of note; perhaps, coupled with a continuation of Friday’s dollar demand, this makes the EUR’s recent pullback likely to continue.
USD
Having been rather subdued for much of the week, the greenback came alive on Friday, benefitting from haven demand sparked by reports that Russia were planning an imminent invasion of Ukraine (also the catalyst for Friday’s stock market plunge, and bond market bid). Consequently, the dollar index ended the week back above the psychologically important 96.0 mark, as well as above the 50-day moving average, likely giving the bulls the upper hand in the near-term. Looking ahead, Wednesday’s FOMC minutes highlight this week’s economic calendar, likely to be used by the Fed to signal whether policymakers prefer to raise rates by 25bps or by 50bps next month. Other important releases this week include Tuesday’s PPI report, likely showing factory gate price pressures intensifying, along with a check on consumer spending via Wednesday’s retail sales report.
| Date | Region | Release | Previous |
Consensus |
|
Tues 15th |
UK | ILO Unemployment Rate | 4.1% |
4.1% |
|
Tues 15th |
EUR | Gross Domestic Product QoQ | 0.3% |
0.3% |
|
Wed 16th |
UK | Consumer Price Index | 5.4% |
5.4% |
|
Wed 16th |
US | Retail Sales | -1.9% |
1.6% |
| Thurs 17th | AU | Unemployment Rate | 4.2% |
4.2% |
WORLD NEWS
As tensions continue the Ukraine-Russia border, oil price is jumping towards $100 a barrel. Energy bills are continuing to rise with the oil price set to hamper the global economic recovery and push inflation higher. Central banks will be keeping a close eye on the inflation to see if they need to adjust their stance further with rate hikes still expected throughout the year from the major economies. The US has also informed that an invasion into Ukraine could be imminent, this comes after US President Joe Biden and his Russian Counterpart Vladimir Putin call over the weekend which failed to defuse the crisis.
German Chancellor Olaf Scholz has travelled to Kyiv, a day before meeting Russian President Putin to push a diplomatic end to the crisis. The US and its allies have threatened sanctions if Putin orders troops into Ukraine, with US intelligence suggesting that an invasion could be imminent as Russia denies there are plans to do so.
| Share Index | Prev. Close | Open |
| FTSE100 | 7661.02 | 7661.02 |
| DAX | 15425.12 | 15065.73 |
| CAC40 | 7011.60 | 6868..07 |