The US and South Korea have reached agreement on a Trade deal that comes with the added bonus for South Korea of a permanent exemption from Steel Tariffs imposed by the US. The arrangement is to allow South Korea to export up to 2.68 million tons of steel to the US each year, equivalent to a 30% reduction on the average figure over the last 3 years. This is a positive development showing a willingness on the part of the US to sign trade deals, following on the progress made on NAFTA last week.
The Russian Interest Rate Decision was for the rate to be cut to 7.25% against the current 7.50%. The Bank of Russia said that it would continue key rate cuts and will end the shift to neutral stance this year. GDP is expected to be 1.5% to 2.0% from 2018 to 2020. Annual CPI is expected to be between 3% and 4% by year end and 4% in 2019.
FOMC Member Bostic is due to speak about the economic outlook at the Knoxville Economics Forum. Comments made were: Further gradual rate hikes over next couple of years ‘appropriate’. He is confident the US is at or near the Fed’s inflation goal. This week’s interest-rate hike made sense and there is a need to move rates toward ‘neutral’. If economy develops as he expects, will likely support more rate hikes this year. Labour markets ‘not yet overheated’, sees upside risks to labour costs. Inflation calm to persist but risks are to the upside. He sees potential for inflation to run somewhat above Fed’s 2% target.
US Durable Goods Orders ex Transportation (Feb) was 1.2% v an expected 0.5% from -0.3% previously which was revised up to -0.2%. Durable Goods Orders (Feb) was 3.1% v an expected at 1.5%% v -3.7% previously which was revised up to -3.5%. This data series missed to the downside last time out but it has recovered and exceeded expectations. EURUSD fell on the announcement from 1.23555 to 1.23337.
Canadian Consumer Price Index (MoM) (Feb) was 0.6% v an expected 0.5% against 0.7% previously. BOC Consumer Price Index Core (YoY) (Feb) was 1.5% v an expected 1.4% against 1.2% previously. BOC Consumer Price Index Core (MoM) (Feb) was 0.7% v an expected 0.5% v a prior 0.5%. Consumer Price Index (YoY) (Feb) was 2.2% v an expected 2.0% against 1.7% previously. Consumer Price Index – Core (MoM) (Feb) was 0.2% v an expected 0.5% against 0.2% previously which was revised up to 0.3%. Canadian Retail Sales ex Autos (MoM) (Jan) was 0.9% v an expected 0.9% against -1.8% previously which was revised up to -1.7%. Retail Sales (MoM) (Jan) was 0.3% v an expected 1.1% against -0.8% previously which was revised up to -0.7%. Inflation showed an expected rise after a beat last month, with gasoline, autos and mortgages all contributing to the increase. Retail sales were expected to be stronger and have missed for the second month in a row. Autos were largely the culprit for this miss with building materials also a drag. USDCAD fell sharply from 1.29069 to 1.28345 after the data deviated from expectations.
UK MPC Member Vlieghe is due to speak at the Birmingham Chamber of Commerce. He made headlines by saying that recent data adds to warranting removal of monetary stimulus. He also said that the current outlook is consistent with 1 or 2 0.25% rate hikes per year in forecast period and rates will need to rise over forecast period if the current balance of global risk vs Brexit headwinds persists. The tight labour market continues to increase domestic inflationary pressures. EURGBP fell from 0.87401 to 0.87114.
US New Home Sales (MoM) (Feb) was 0.618M v an expected 0.623M from 0.593M previously which was revised up to 0.622M. New Home Sales Change (MoM) (Feb) was -0.6% v an expected 4.4% v -7.8% previously which was revised up to -4.7%. On the back of strong HPI data Thursday, Sales improved as expected after falling for three months. However they fell short of the expected level. GBPUSD moved higher from 1.41483 to 1.41717 as a result of this data.
Baker Hughes US Rig Count numbers was released and came in at 804. The prior number last Friday showed that there were 800 Oil rigs in operation. WTI traders will be paying close attention to this number as they look to the week ahead.
EURUSD is up 0.10% overnight, trading around 1.23654.
USDJPY is down 0.14% in the early session, trading at around 104.992
GBPUSD is up 0.12% this morning trading around 1.41525.
USDCAD is unchanged in early trade at around 1.28718
Gold is down -0.12% in early morning trading at around $1,345.30
WTI is down -0.50% this morning, trading around $65.56