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  
Trump's Tax Reform Plan

US Treasury Secretary Mnuchin announced Trump’s tax reform plan in a press conference...

Corporate Earnings Lift US Stocks

Last week the US President Trump stated on twitter...

Market Concerns Eased

The first-round voting of the French presidential election was revealed on Sunday night...


Dollar Plunged on Trump Second Statement

The dollar index fell to a 2-week low of 99.91 in the early hours...

Markets Eye on the First Trump-Xi Meeting

US President Trump and Chinese president Xi Jinping, are scheduled to meet today at Trump’s Mar-a-Lago resort in Florida...

Will the French Presidential Election affect EUR?

The first round of the French presidential election...


USD Firms Ahead of Q4 GDP Final Reading

The dollar index has rebounded noticeably from a 4-and-a-half-month low of 98.85, helped by outperforming...

Divergence Between Fed and BoJ

The March FOMC meeting will be held for two consecutive days from today. The interest rate decision will be announced at 18:00 GMT on Wednesday 15th March...

Market Volatility Expected Ahead of President Trump's Speech

In a speech that will be watched by millions of viewers in the United States and around the world, the President is expected to speak of his presidency and address pressing issues like his plans for health care, the tax system, the military, and his goals for his administration...

  


Share: