Today's data releases
 Key levels
08.30Swiss National Bank interest rate decision SupportResistance
12.30US initial jobless claimsGBP/USD1.36571.4070
12.30Philly FedGBP/EUR1.11861.1400

Market overview

US retail sales came in at -0.1% month-on-month for the headline figure versus expectations of 0.3% growth and 0.2% for the figure ex Autos versus expectations of 0.4% growth. This was the third consecutive month of shrinking figures, the first time that has happened in five-and-a-half years. This concern that consumer spending is cooling alongside Tuesday’s ‘muted’ inflation data helps to make the case for only three interest rate rises this year. The news put further pressure on the dollar.


In Europe Mario Draghi spoke yesterday and gave us a message we have come to expect – there should be a moderate series of rate rises after the bank ends its extraordinary stimulus measures. Data-wise European industrial production data came in worse than expected at -1.0% month-on month growth versus expectations of -0.4%.


Domestically Theresa May has expelled 23 Russian diplomats after Moscow refused to explain how a Russian-made nerve agent was used on a former spy in Salisbury. Russia is likely to, at the very least, expel a similar number of British diplomats in retaliation. The situation is ongoing and for now is something we’re keeping an eye on.

Lastly in the world of Brexit, discussions look to be moving in the right direction again in the run up to the 22/23 March EU Summit. Both sides in the talks are said to believe they are getting closer to a deal on a transition package, which bodes well for sign-off at the Summit next week. Reports indicate that the transition period is expected to last nearly two years until the beginning of 2021, with David Davis (Brexit secretary) saying he could ‘live with’ a period of less than two years; hence importantly this length of transition period does not seem to be a show stopper to a deal next week.

Progress also looks to have been made on the trade front, where the EU’s position has reportedly softened to say that the UK will now be able to both negotiate and sign trade deals during the transition period, in what looks to be a clear step forward in talks, from a UK perspective. Furthermore, the EU is also now said to have agreed that the UK will not have to defer to Brussels in WTO talks and will be able to participate ‘in its own right’, as long as it sticks to EU rules; this is seen as particularly important in allowing the UK to negotiate trade deals during the transitional period. Overall, ahead of next week’s Summit, there appears to be positive momentum, although British officials are still flagging that ambiguities needed to be ironed out. Brexit Secretary David Davis looks set to head out to Brussels on Sunday to meet with negotiators and his EU opposite number Michel Barnier, so we may well hear more on progress at that point.


The day ahead

It’s a day of a few notable bits and pieces but nothing of substance unless there are major surprises with the central banks or if political tensions heat up. FX-wise we have the Swiss National Bank Interest Rate Decision at 8.30am and a range of US data at 12.30pm, the highlights being initial jobless claims and the Philly Fed survey. At this stage it is also worthwhile starting to think about next week which features the Fed, Bank of England, and the EU Summit which focuses on Brexit. 


Thought of the day

St. Patrick’s Day is approaching and will be celebrated today at Cheltenham Festival and over the weekend across the world. Also known as the Feast of Saint Patrick, Paddy’s day is a cultural and religious celebration held on 17th March, the traditional death date of Saint Patrick, the foremost patron saint of Ireland. Paddy’s day traditions consist of sharing a meal of corned beef and cabbage, a staple of the Irish diet, as well as numerous pints of Guinness another staple of the Irish diet. This weekend the Irish may have even more to celebrate as Ireland take on England in the Six Nations, having already been crowned as champions, Ireland will be looking to complete only their third Gland Slam should they beat the English! The UK are making positive steps as Brexit discussions look to have made a move in the right direction. Talks have progressed on the transitional deal as both the UK and EU try to thrash out a deal ahead of the one year deadline before we officially leave EU. Investec are hosting a conference call with our Chief Economist Phil Shaw, Tuesday 20th March 10am, be sure to register to understand whether sterling will climb beyond the EU summit

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