Author: Terry Lovell (Head of Sales), Orbis Exchange
Market Report - 27/02/23 - 03/03/23
- CIPS Manufacturing PMI out for the UK
- HICP data out for the Eurozone
- Durable goods order out in the USA
The main market mover for the Pound last week was when we saw the Services PMI released last week, within the hour of its release we saw a rise of 1% against the USD and 0.75% against the EUR, from there it was a downwards trend towards the back end of the week as the market began to settle. Last week was also the first time in years that we had a surplus in the UK Budget, which helped towards the GBP strength seen on Wednesday. This week we have the CIPS Manufacturing PMI being released, this is the most important piece of UK data being released this week, if we see a rating above 50 then this could be seen as positive for the Pound, but if we see a level below 50, which shows contraction, then this can be seen a bearish for the GBP.
Last week the Euro had a surprisingly poor week compared to its competitors, this is one of the first weeks this year that Euro has weakened against both the GBP and USD, the major piece of data in the Eurozone last week was the Composite PMI, this saw a positive result showing growth, but was at the time outshined by the result from the UK. This week we have the HICP data for the Eurozone and Germany. The German data coming first, this will give us a good idea of the direction the inflation levels are going for the Eurozone. Typically, a rise in inflation would show as bullish for the Euro, this is because it would lead to the ECB’s next Interest rate decision looking more likely to be raised again, but if we see a drop in the inflation levels, then this could be seen as bearish for the Euro.
GDP Figures in the US was the major piece of data released, we saw a drop from 3.2% to 2.7%, even with this negative data, the USD was the best performer last week between the Euro and GBP. We saw Joe Biden go to Ukraine and Poland last week to address issues on the 1-year anniversary of the Ukrainian War, this as well as Vladmir Putin’s national address increased risk sentiment in the market, which in turn, strengthened the USD. The main reason the USD held at a 7-week peak at the end of last week is that recent data releases have shown us that the Fed will raise interest rates further and for longer. This week we have the Durable goods orders in the US. Consensus shows us a big drop in the figures, if we do see a drop which as expected then this could have a negative effect on the Dollar, if do see a rise instead, then this can be seen as bullish for the USD.
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