The growth slowdown

25 February, 2016

China is stumbling into this weekend’s G20 meeting of Finance Ministers and Central Bank governors, with stocks down more than 6% overnight, money market rates rising and the currency weakening further. The IMF has called for further action to support growth, which has disappointed on many fronts so far this year. There is also an underlying risk that the US economy grinds to a complete halt in the first quarter. Talking of growth, we have the second estimate of UK GDP at 09:30 GMT today. For sterling, it’s not been about the economy recently and all about Brexit, so this data will probably not change the bearish tone on the pound unless we see some major deviation from the provisional estimate (low probability of that). The risk of a short squeeze on sterling is naturally rising as the currency moves ever lower, but as always this could require some sort of trigger. For sure, the Brexit referendum continues to create a bearish backdrop, but in the world of currencies nothing moves in a straight line forever.

Other distractions today includes money supply data from the ECB at 09:00 GMT, together with inflation data at 10:00 GMT, where the final numbers are seen steady at 0.4% YoY on the headline rate, with core inflation holding at 1.0%. For currencies, the underlying drivers remain mixed, with the safe havens (principally the CHF and JPY) finding the path of least resistance higher, even though we saw some softening yesterday and overnight. As we mentioned yesterday, currencies could well be a talking point behind the scenes, but market should be aware of the risks that some of these strains could be seen at the surface.


Source link  
Markets recover after the drop

The markets decline on investors' fears that trade conflicts will drag on and slow down demand, and this dynamic coincided with breaking through important...

Markets pressured by Huawei problem

Alphabet and some other American IT companies have suspended business with Huawei, which is one of the first examples of major consequences for...

The climate is changing rapidly

British people need to fly less, drive electric cars, eat little meat and turn their home thermostats down to 19 degrees Celsius (66 Fahrenheit) in order to rein...


Chinese stocks saw their worst week

Chinese stocks have taken investors on a ride this year. Shanghai and Shenzhen have been the best performing global markets this year, with the Shanghai...

Risk-sensitive currencies on the rise

Stock markets show growth after the release of strong data for China and Japan as their respective PMIs were better than expected which supported...

Trump again puts pressure on OPEC

President Donald Trump told OPEC on Thursday that its members should start pumping more oil, marking his second warning to the producer group this year...


Turkish lira fell by 5% before elections

The Turkish lira dropped by as much as 5 percent against the dollar on Thursday morning, as the country gears up for elections this weekend. The greenback...

May won't ask for a long Brexit delay

Prime Minister Theresa May won't ask the European Union for a 'long' delay to the Brexit deadline, her office said, after pro-Brexit ministers objected...

Demand for safe assets grows

Markets remain under moderate pressure, despite the Fed comments. Powell's semi-annual speech in Congress reinforced expectations that the US Central Bank...

  


Share it on:   or