Morning Comment

EURO ZONE

The Euro is under pressure this morning after a disappointing German Factory Orders release, which came in at -1.6% vs. 0.3% m/m expected. Euro/Dollar back trading on a 1.13 handle, which comes before EU’s revision to growth forecasts expected to be released later this week. The day ahead is quiet in terms of data releases, with some eyes turning toward trade as EU trade chief Cecilia Malmstrom meets with the Expert Group on EU Trade Agreements in Brussels tomorrow, but the narrative for the Euro remains the same – weaker data, bund yields capped and Euro/Dollar range bound.

No data of note today.

UK

Some renewed pressure on Sterling yesterday as headlines that the UK Government has made no decision on tariffs post-Brexit weighed on sentiment; Sterling fell below 1.30 versus the Dollar which pushed Euro/Sterling up to a two week high above 88p. UK Services PMI also came in lower than expected at 50.1 against the 51 forecast. Today is quiet on the data front ahead of tomorrow’s Bank of England meeting while PM May will meet the EU’s Tusk tomorrow afternoon.

No data of note today.

US

The Dollar has been climbing higher overnight, with President Trump’s State of the Union address not providing any surprises – although his comments on the Russia investigation caused a slight wobble in risk as he labeled the “ridiculous investigations” as a threat to the economy, pushing USD/JPY lower. It also seems unlikely there’ll be bipartisan agreement on border wall funding, increasing the probability of another shutdown. On the data front ISM non-manufacturing came in slightly softer yesterday at 56.7, while the main release for the day ahead will be the US trade balance in the afternoon. Fed Chair Powell is also due to speak this evening.

Trade balance @ 1.30pm