Daily Market Report - 23/02/2016

GBP

According to Capital Economics sterling is likely to continue falling even with the risk of Brexit, this is partly because the US is likely to continue interest rates while the Bank of England holds steady. The pound hit its lowest point against the US dollar in almost seven years. Sterling has extended its losses, and close to its lowest level since March 2009. The pound lost over three cents yesterday, tumbling by over 2.3%, as Boris Johnson’s decision to back the Out campaign continues to cause shockwaves through the international currency markets.

USD

Yesterday, the Chicago Fed national Activity Index was released. This is a monthly index designed to gauge overall economic activity and inflationary pressure. A high reading of this is good for the US to stay on track for their 2016 interest rate hikes. This came out better than the previous months -0.22 with a reading of 0.28.
We also had the market manufacturing PMI released, which captures the business conditions in the manufacturing sector. A reading above 50 is bullish for the USD whereas a reading below 50 is dovish. The consensus for this was 52.0 which was point 4 below the previous months reading; the actual figure was 51 which is still good for the USD but worse than expected.

EUR

The composite purchasing manager’s index, fell to 52.7 in February from 53.6 in January as eurozone economic activity slowed for the second straight month in February, according to surveys of purchasing managers, while businesses lowered their prices more sharply. The eurozone economy slowed slightly in the second half of last year as demand for its exports from China and other large developing economies eased. The surveys provide further indications that the recovery is losing momentum as financial markets slide, while the decline in oil prices since the start of the year has weakened the outlook for inflation in the eurozone.

Key Announcements

10:00 – GBP: UK Inflation Report Hearings
15:00 – USD: US Consumer confidence (Feb) is expected to fall to 97 from 98.1.