Trump momentum regains investor’s confidence

Yesterday’s markets

2nd March 2017

  • GBP - Manufacturing PMI: 54.6
  • CAD - BOC Rate Statement
  • CAD - Overnight Rate: 0.50%

After US President Donald Trump gave his first speech to congress in the early hours of yesterday morning, the Dollar made gains against its major peers.  The President’s speech offered no negative surprises and the hawkish rhetoric seemed to give investors confidence in the US economy.  As a result of this and the recent hawkish comments from Fed members, the probability of a rate hike at the next Federal Reserve meeting has jumped up to 80% from 50%.  This change in expectations has seen Sterling suffer against the Dollar, falling to a six-week low with the Euro also losing ground against the Dollar.

Manufacturing for the UK posted good growth of 54.6 in February, but fell short of market expectations and slowed to its lowest rate in 3 months.  Also impacting the Pound, the Brexit bill continues to be debated in the House of Lords, with the focus on a vote against the government, giving protection to EU citizens residing in the UK. Anything that looks negative on Brexit issues weighs on the Pound, as we saw yesterday.  With the disappointing manufacturing PMI and the ongoing Brexit debate, Sterling continues to be on the back foot.

Today’s markets

1st March 2017

  • GBP - Construction PMI
  • CAD - GDP m/m
  • USD - Unemployment Claims 

The only piece of data being released today of any note is the Eurozone inflation figure.  The European Central Bank has been battling deflationary pressures since early 2016 and the CPI figure is now sitting at 1.8%, just below their target of 2%. 

Inflation is expected to hold steady today, however any increase towards or above 2% could force the ECB to consider tapering the current QE program which would be positive for the single currency.  In the UK, the construction PMI reading hits the wires and is anticipated to stay anchored at a growth figure of 52.2.