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EU leaders to meet 29th April - Euro currency news daily

22 March 2017, 13:58 CET
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Euro

The news came in yesterday that EU leaders will be meeting on the 29th April (exactly 1 month after Theresa May plans to enact article 50) to discuss plans for negotiations with the UK in regards to Brexit. These negotiations are expected to last for up to 2 years and although there will certainly be twists and turns along the way we will get an indication as to what stance the remaining EU members will be taking. Little data of note is due today as the focus will remain on Greek debt, Brexit and upcoming elections.

GBP/EUR is currently trading at 1.1565.

US Dollar

Minor data released yesterday did little to motivate movement in the USD as investors were focused on a fragile political landscape and sensitive stocks. US stocks have managed to remain relatively strong this year while the USD has steadily weakened since its peak in January. This period of consistency ended overnight with US stocks taking a tumble. Stocks fell across the board with the S&P 500 Index falling almost half a percent (the largest losses seen since the presidential election) and with Banks falling almost 3% (the largest slide since the UK referendum). These losses are due to the uncertainty surrounding President Trump's latest policy announcements. Markets are starting to question whether they have been too generous in trusting Trump's policies surrounding the US economy and many believe that his growth policies may not be passed by congress. With a key health care bill due to be discussed on Thursday, we could see further volatility. If Trump fails to pass this bill we could see markets react negatively. Today's main releases will be Existing Home Sales, which is due to fall from 5.69M to 5.59M, and Crude Oil Inventories which is due to rise to 1.9M from -0.2%. Data will likely not move markets while investors pay close attention to politics, stocks and Fed speakers.

Yesterday saw sterling recover some of its recent losses, climbing over 1% on the release of the latest inflation figures. CPI y/y climbed to 2.3%, above the forecast 2.1% and well above the previous figure of 1.8%. This is the first time in 4 years that inflation has surpassed the BOE's target figure of 2%. BOE had previously forecast a figure of 2.7% in the next year, however, the central bank may reconsider this estimate and think about what fiscal measures may need to be introduced. This sharp rise in inflation is due, in large part, to a dwindling pound which in turn is causing import prices to soar. With little data of note due today from the UK investors will turn to wider economic and political factors to determine trade patterns. Any news regarding Brexit will always be a risk to the Pound.

GBP/USD is currently trading at 1.2483.

Aussie and Kiwi Dollars

Very little of note came out of Australia yesterday as markets digested the Monetary Policy meeting minutes from Monday night. Falling stocks in the US and Asian markets put substantial pressure on the Australian Dollar. A risk-off approach was taken from investors which saw steep losses from the Australian Dollar across the board. If global uncertainty continues we may see the Australian Dollar struggle over the next few weeks.

Little data of note today will leave investors taking guidance from global stocks. We saw a busy night for the New Zealand Dollar. There was a positive start to the day's session with the Global Dairy Trade Price Index rising steeply and coming in well above expectations. This figure rose by 1.7%, and following a previous decline of 6.3% the New Zealand Dollar reacted positively, rallying immediately across the board, moving to a 2 week high against the USD. These gains were short-lived as global risk sentiment put pressure on commodity prices which in turn weighed on the NZD. As global uncertainty continues today we may see further pressure on the fringe currencies such as the NZD and AUD. Investors will now turn to tonight's Interest Rate Decision and Policy Statement from New Zealand. The RBNZ have maintained a relatively neutral position of late and we are unlikely to see any change to the 1.75% rate.

GBP/AUD is currently trading at 1.6306. GBP/NZD is currently trading at 1.7745.


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Document Actions
Eurozone Economic Calendar

Monday 20 March


11:00 Labour cost (Q4)

Tuesday 21 March


15:30 Targeted LTRO

Wednesday 22 March


09:00 Non-monetary policy's ECB meeting
11:00 Current Account n.s.a (Jan)
11:00 Current Account s.a (Jan)

Thursday 23 March


10:00 Economic Bulletin
16:00 Consumer Confidence (Mar) (Preliminary release)

Friday 24 March


10:00 Markit Manufacturing PMI (Mar) (Preliminary release)
10:00 Markit Services PMI (Mar) (Preliminary release)
10:00 Markit PMI Composite (Mar) (Preliminary release)
20:30 CFTC NC net positions