Daily Market Report - 03/03/2016

GBP

The construction industry put in its worst performance for 10 months in February, after the slowest rise in house building since 2013. Concerns of a slowdown in the economy, coupled with the continued prospect of a Brexit restricted activity across the sector last month. The UK Construction PMI registered 54.2 in February, down from 55.0 in January – the lowest figure since April 2015.
Two research articles, published major global banks, both stated that they see enough downside potential in GBP for it to hit parity against the Euro should the UK exit the European Union. They found that GBP/EUR would either move close to the 1.40 level if the UK remained in the EU, or to parity, if Britain left. They added that if Britain voted to stay in, the market would once again start to anticipate a Bank of England rate rise soon after.
 

USD

Yesterday saw the release of the ADP Non-Farm Employment change which came out at 214,000 which was significantly above expectations of 190,000. Of this, 76,000 jobs were created in small businesses and 18,000 within franchise employment. As employment has a direct correlation with consumer spending and economic activity, it was unusual to see that no real gains were made for the Dollar.
Crude oil inventory figures were also released, which saw a change in the number of barrels held by commercial firms increasing from 3.5m to 10.5m, further showing proof of oversupply in the market. Oil prices fluctuated as a result with Brent Crude down 12 cents by end of trade.
 

EUR

Spanish unemployment continued to rise with figures showing that an extra 2,231 people registered with the Public Employment Services in February after forecasts predicted only a rise of 200. Producer Price Index (YoY) figures were also announced, coming out lower than forecasted at -1.0%, when expected at -0.9%
 

Key Announcements

09:30 – EUR: Markit Services PMI expected to remain level at 53
13:30 – USD: Initial Jobless Claims expected to decrease from 272,000 to 271,000