Other Currencies – Highlights Sterling remains steady against the Australian Dollar, with the exchange rate at 1.78 AUD. The Pound continues to steadily increase against the Japanese Yen, which now stands at 146.66¥. The international markets have responded positively to the easing of high tariff introduction on steel and aluminium imports. The Asian saw a slight recovery in stocks this Tuesday, with the Nikkei 225 up 1.8%, the ASX 200 up by 0.8% and all other regional bourses higher. The Australian Dollar has remained steady, with only minor retail sales and trade figures appearing a little under forecast. After yesterday’s uncertainty regarding the impact of import tariffs, today’s ease on speculations of global trade wars has left the Reserve Bank of Australia at ease, which is also proven by no changes to their monetary policy.

Euro – European Markets The Euro remains steady against the Pound, with the exchange rate set at £0.89. As trade war concerns ease, the European Union remains alert and holds on to their stand of retaliation in case of the tariffs’ go-ahead. The EU’s retaliatory list targets important from the U.S of jeans, shirts, cosmetics, motorbikes and leisure boats worth around 1 billion euros. Products such as orange juice, corn, bourbon whiskey are likely to total up to a close to a billion euros range too. Other imports are also mentioned, totalling up to an estimate of 2.8 billion euros. The European Commission President Jean-Claude Juncker and his leadership team are due to discuss the retaliation proposal at a meeting on Wednesday. After the European markets close, Bank of England Chief Economist Andy Haldane will be speaking at an event in London. The markets attach around 75% probability of an interest rate rise in May, markets will be keeping a close eye on what he says.

US Dollar – US Markets The Euro remains steady against the US Dollar, exchanging at $1.23. The US Dollar Index (DXY), which measures the strength of the Dollar against six major competitor currencies, saw an increase and sits at 90.01. The U.S President Donald Trump’s recent announcement about plans to introduce high import tariffs for steel and aluminium sparked realistic trade war concerns over the weekend. However, this Tuesday the fears seem to be easing over. The Dollar is seen to be holding steady against the other major currencies. DXY, which is currently measuring at 90.01, proves the statement. International markets have took the view that Trump’s planned tariffs are in fact a negotiation tactic that is aimed to push Mexico and Canada to sign a new version of the North American Free Trade Agreement, or NAFTA. US February non-manufacturing PMI has exceeded observers’ expectations and currently sits at 59.5%. Yes the economic activity in the US non-manufacturing sector fell in February to 59.5%, down from 59.9% in January, however this reading still represents the 97th consecutive month of growth, according to the institute of Supply Management, as the market has expected a February reading of 58.9%. Today the market will keep a close eye on the US data ahead of Friday’s key job report for further signs of underlying growth. Today we have the release of the factory orders along with the durable goods. In addition, there will be a lot of focus on US Fed speakers. Outgoing NY Fed President William Dudley will take part in a roundtable discussion, while Fed Governor Lael Brainard and Dallas Fed President Robert Kaplan are also scheduled

Pound Sterling – UK Markets The Pound saw a slight drop against the Euro, just about hanging in the €1.12 mark. Similarly, Sterling has seen a slight drop against the US Dollar too, with the exchange rate barely keeping at $1.38. The UK’s engineering giant GKN may be sold to Melrose Industries, a firm that specialises in buying up industrial companies it believes are undervalued and restructuring them before selling them on. Melrose has offered £7.4bn for the 259-year-old firm, however the deal is being choked by 16 members of parliament, based on the Pension Regulator that warns of concerns towards whether the company would be able to fund its pension scheme. The deal could provide a blow to the UK economy, as GKN, one of the UK’s largest industrial firms is likely to be broken up and sold to overseas owners. Bosses of both companies are due to appear before the parliamentary committee this Tuesday. The Pound is set to remain steady as the Brexit talks move along, proving to be impenetrable even by May’s recent speech, which has barely affected the Pound’s worth within the international markets.

Other Currencies – Highlights Sterling has strengthened to the Australian Dollar, with the exchange rate at 1.78 AUD. The Pound followed similar increase when it came to its stand against the Japanese Yen, which now stands at 146.07¥. The Australian government has admitted that it remains in a limbo of uncertainty, after the US President Donald Trump’s ‘new tariffs’ threats. Australia is still not sure whether they will be exempt from the new tariffs if the plans do come into reality. Concerns of a trade war and a global recession are dominating talks by the country’s ministers. Australia’s BluScope Steel, which has operations on the west coast of the US, employs 3,000 people in California and Washington states, and their activities would be majorly affected. Newly gathered statistics show that South Africa Standard Bank PMI has had a positive growth impact, as it went up to 51.4 in February of 2018 from 49 in January. The increase points to the first expansion in private sector activity and the sharpest since July, as output and new orders return to steady growth after climbing past the PMI 50 mark.

Euro – European Markets The Euro remains steady against the Pound, with the exchange rate set at £0.89. Italy is facing a prolonged period of uncertainty and political volatility after voters delivered a hung Parliament in Sunday’s election, snubbing traditional parties and pushing for anti-establishment and far-right groups in never seen before numbers. This unexpected turn of events is likely to make the heavily indebted Italy the focus of market discussions in Europe. The Eurosceptic 5-Star Movement saw its support soar to become the largest single party, based on early vote-counting projections. All this has overshadowed the differing news that Merkel is set for a fourth term after the SPD voted in favour of another grand coalition. The big focus for the EU traders will be on the coming Thursday, when the European Central Bank meeting will be held. It has been rumoured that there may be a change in the rhetoric with regards of QE. In addition, the market will be keen to see the view of the ECB with regards to Inflation, which at the moment is seen to be running way below the target.

US Dollar – US Markets The Euro remains steady against the US Dollar, exchanging at $1.23. The US Dollar Index (DXY), which measures the strength of the Dollar against six major competitor currencies, saw a 0.08% drop and sits at 89.93. The main focus in the US market is currently set on the development of President Trump’s announcement about possible imposition of tariffs on the steel and aluminium imports. Trump has threatened to increase taxes on European cars if the EU retaliates against tariffs on steel and aluminium. China is following EU’s response and vows retaliation if US tariffs bite. Due to last week’s semi-annual testimony by new FOMC Chair Powell, we saw the all-important jobs data bumped to this week. Following on from Powell’s stance, the market will be keen to see if further salary inflation is reported and whether the job creation remains healthy.

Pound Sterling – UK Markets The Pound remains steady against the Euro, exchanging at €1.12. Sterling has seen a slight increase against the US Dollar, with the exchange rate at $1.38. Britain has seen minor pick-up in its struggling construction industry in February, believed to be mostly led by the commercial sector. However, the uncertainty brought by Brexit continued to put pressure on order books. The HIS Markit/CIPS UK Construction PMI rose to 51.4 from 50.2 in January. The civil engineering sector however suffered its worst performance in five months and remains in a weak position. PMI covering the much larger services sector is due to be released on the 5th of March. Office for National Statistics report released last week has proved some observers who had cheered a last minute lift in UK economic momentum wrong, showing that the UK economic growth was not 0.5% like first suggested and was in fact 0.4% during the final quarter of 2017. This and other newly released data is likely to affect the Pound, because it could impact on the Bank of England and its verdict on whether the UK will be able to sustain another rise in interest rates.

Other Currencies – Highlights Sterling has strengthened to the Australian Dollar, with the exchange rate at 1.78 AUD. House prices in Australia stopped falling last week, according to data released by CoreLogic. ANZ bank noted there is “evidence that the slowdown in house prices is stabilising,” although they expect annual house prices will continue to slow. The Pound is holding steady against the New Zealand Dollar, exchanging at 1.91 NZD. The New Zealand Dollar fell after a larger than expected trade deficit of $566million for January. Trade Balance figures also showed annual exports rose by 9%, while imports grew by 17%. Sterling has dropped to the Swiss Franc, exchanging lower at 1.30 CHF. The chairman of Switzerland’s stock exchange, Romero Lacher has said there are “a lot of upsides” to releasing a crypto version of the Swiss Franc, saying that the organisation would be “very supportive of the idea.”

Euro – European Markets The Euro has recovered against the Pound, with the exchange rate set at £0.88. The Euro dropped briefly after Mario Draghi, president of the European Central Bank (ECB), indicated the central bank is in no rush to taper their stimulus programme. Draghi reiterated his message that patience and persistence is needed to allow the central bank to achieve their primary objective of letting inflation rise to the 2% target. UBS has upgraded its economic forecast for France from an expectation that GDP would rise by 1.8%, up to 2.3%, this year. Next year’s GDP was upgraded from 1.6% to 2% due to the increased business optimism after president Emmanuel Macron’s ambitious reforms renewed confidence and increased investment. Germany’s inflation rate will be seen later today when Destatis releases the Harmonised Index of Consumer Prices. Year-on-year prices are forecast to fall to 1.3% for February, down from 1.4%, due to seasonal factors. Germany’s Harmonised Index Consumer Prices is expected to rise to 0.6%, following January’s drop to -1.0%. Tomorrow Germany’s Unemployment Change is likely to have dropped by 15,000 after January’s record-low unemployment rate showed the country’s labour market is the strongest it has been in 25 years.

US Dollar – US Markets The Euro has climbed against the US Dollar, exchanging at $1.23. The US Dollar Index (DXY), which measures the strength of the Dollar against six major competitor currencies, is down, at 89.78. New Federal Reserve chair Jerome Powell delivers his first testimony to Congress, today. Due to the size of the US economy, Powell has been called “the most important economic policymaker in the world.” Recent market volatility has been caused by uncertainty about his plans to raise interest rates. If Powell indicates he intends to raise rates further than has been expected, the markets will be impacted. Yesterday, St Louis Federal Reserve President James Bullard expressed concern about raising interest rates rising “too far, too fast,” arguing that the US is in a low-growth and low-inflation cycle. Bullard says rates should not rise much further, if at all, until data changes. Raising rates risks creating a “restrictive” policy setting, he said. New Home Sales for January fell to 0.593million after they were expected to have increased to 0.645million up from 0.625million for December. This brought the New Home Sales Change sharply down to -7.8%, following December’s decrease to -7.6%, rather than the 3.2% increase that had been forecast. Today, annual housing prices from December will be seen in the S&P/Case Shiller Home Price Indices and December’s Housing Price Index.