Today's data releases
 Key levels
10.00EU March Flash CPI (final)GBP/USD1.38901.4278
10.00EU Unemployment DataGBP/EUR1.11351.1560
10.15US ADP Employment Change   
15.00US ISM Non-Manufacturing Indes   

Market overview

Last night the US published a proposed list of tariffs which would hit $50bn worth of Chinese imports, much of the list consists of technology goods in response to what the US sees as an infringement of US intellectual property, although in total the list contains 1300 products. Note that the proposed list does not go into immediate effect, instead there will be a 30-day period of consultation. China has vowed to respond and is set to detail its own response today.


In the UK, we had the March Manufacturing PMI, which rose to 55.1 from a revised 55.0 in February. Consensus expectations including our own forecast were for 54.7. The tone of the report is pretty upbeat, with the survey compiler noting that the tick up in the pace of expansion was particularly encouraging ‘given the heavy snowfall during the month’. In the detail of the report, it is stated that companies continued to report solid inflows of new work from both domestic and overseas markets whilst it is reported that new export orders rose for the twenty-third month running too. Note that sterling was rising in the run-up to the release and moved relatively little after the publication.


We had some Fed speak yesterday. The Fed’s Brainard reiterated that US fiscal stimulus and other economic tailwinds create a backdrop that “warrant continual gradual increases in rates”. She also noted that whilst stimulus should boost the economy, the economy is close to full employment but it is still hard to know with precision how the economy is likely to respond. On asset valuations, she pointed out that valuations in a broad set of markets appear elevated. On the other hand, Fed’s Kashkari reiterated his dovish views and noted that rates are probably pretty close to the neutral levels right now and while US tax cuts have clearly lifted enthusiasm among businesses it is still unclear if the cuts are actually going to lead to more investments. Staying with Fed news, the NY Fed named San Francisco Fed’s John Williams as its next president and he is expected to succeed Bill Dudley in June 2018. 


The day ahead

This morning we have the March CPI report and the February Unemployment report for the Euro area. In the US we will have the ADP employment figure followed by the ISM non-manufacturing index. Fed's Bullard and Mester are also scheduled to speak.


Thought of the day

Yesterday we received the illustrious news from our friends over at Bloomberg that Investec has topped their rankings for overall FX forecast accuracy (major currencies) in Q1 2018. Based on 3 main criteria; margin of error, timing (for identical forecasts, earlier ones received more credit) and directional accuracy (movements with the currency’s overall direction), our team of economists scored 66.75 across 13 major currency pairs, beating off competition from 63 other qualifying firms. Led by their Chief, Philip Shaw, it is not unusual for the team to appear in the headlines regularly featuring in the Financial Times, Reuters and Sky News. To tap into this market-leading resource and specifically our Global Economic Overview for March, give our dealing team a call today on 0800 055 6339.

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