Are You Ready for Powell Testimony Round Two?

Daily Update - 01st March 2018

Yesterday’s Market

• GBP Gfk Consumer Confidence
• EUR Gfk Consumer Confidence, Unemployment Change & Rate, Consumer Price Index
• USD GDP Annualized, Inflation Data & Pending Home Sales

Yesterday Explained

The dollar continued its upward movement against the major currencies after Jerome Powell’s statement where he forecasted four more rate hikes this year. This was a higher number than traders had expected. The echoes from Powell's hawkish stance on tuesday were still being heard. Earlier, in the day US GDP came out at 2.5% annualized as expected and also EZ inflation met expectations.

The pound was among the biggest loser yesterday, falling by more than a percentage point against the dollar.  EU published a plan to keep the North Ireland region in the single markets and customs union after Brexit. The new move by the EU is detested in the UK, with Prime Minister May saying she would not sign a law that would indirectly annex a part of the country.

In the European Union, Germany’s unemployment ‘change’ improved better than expected while the unemployment ‘rate’ remained unchanged at 5.4%. At the same time, inflation for the region remained unchanged. The Core CPI data showed that inflation remained stagnant at 1.0% while the YoY CPI stood at 1.0%.

Today’s Market

• EUR Markit Manufacturing PMI, Unemployment Rate
• GBP Markit manufacturing PMI, Consumer Credit, Mortgage Approvals
• USD Core Personal Consumption Expenditures, Personal Income and Spending, Continuing and Initial Jobless Claims & ISM data

Today’s Focus

Once again, last working day of Middle East market is going to end with some major market data from United States along with the final testimony from Fed Chair Person Powell, this time in front of the US Senate Banking Committee. As Powell has already made it clear to the House committee that heightened market volatility will not stop the Fed from raising interest rates as it sees fit, it is likely that he will deliver yet another hawkish statement to the Senate committee.

By Mid-day we will see the release of Markit manufacturing PMI from Germany which captures business conditions in manufacturing sector. Then comes the release of Euro Zone Unemployment rate which is the number of unemployed workers divided by the total civilian labor force.

These reports are followed by Markit Manufacturing PMI from UK along with consumer credit and mortgage approvals. Then the focus moves to USA with the release of several data figures. First up will be Core Personal Consumption Expenditures which is an average amount of money that consumers spend in a month. This will be followed by Personal Spending and Income figures. Continuing and Initial Jobless claims for Feb will be released then onwards, while the day will end with ISM data which shows business conditions in the US manufacturing sector.

Furthermore, Over the weekend Pound will be under serious pressure as important speeches from UK Prime Minister Theresa May and BOE Governor Mark Carney is scheduled.  These speeches will be closely monitored as Sterling has lost ground as developments concerning Brexit has now raised the prospect of the EU and UK failing to reach a transitional deal in March.