The Eurozone’s Economic Confidence Index, fell for the second consecutive month, after posting 17-year highs back in December. The Index posted 114.1, which was in line with the expected 114.0 reading. The Business Climate Report, posted 1.48, the lowest level since October. Three of the largest economies within the Eurozone showed a decline in their Consumer Sentiment Report; Germany, France and Spain. However, despite the upcoming uncertain Italian election, Italy’s index showed a rise in consumer confidence.
The Greenback strengthened yesterday, as Federal Reserve Chair, Jerome Powell testified for the first time, since taking over from Janet Yellen, on the semi-annual Monetary Policy Report before the House Financial Services Committee. His testimony sounded a lot like Yellen, however he was hawkish towards faster tightening this year. Powell mentioned how the economy remains strong, playing down the recent market swings, as they seem not to affect his outlook on the economy. The hawkish tones support the markets growing beliefs that the Fed will raise rates four times this year.
The European Union released their latest draft of the Brexit Withdrawal Treaty today, which details how Britain should exit the European Union. The document was prepared by the European Commission Task Force and is yet to be agreed with the UK. The treaty mentioned, as expected, that Northern Ireland must stay within the customs union to avoid the need for a hard border with the Republic of Ireland. It also binds the UK with the European Court of Justice rules until 2030. After the release, EU Chief Negotiator, Michel Barnier held a press conference, where he continued to remind the UK, that the transition period is not a given, due to the differences between the two sides. UK Prime Minister, Theresa May rejected the draft in ‘Prime Minister’s Question Time’ saying it threatens the ‘constitutional integrity’ of the United Kingdom.
The Eurozone will be releasing their CPI Flash estimate today, which after slipping last month is expected to drop slightly to post 1.2%. The Core CPI is forecast to remain stable at 1%. In the US, the Prelim GDP figure for Q4 of 2018 will be released. It is expected to drop to 2.5%. The Chicago PMI is forecast to post 64.1 whilst the Pending Home Sales is expected to drop to 0.4%.