Global equity markets rose across the board during yesterday’s session as tensions in the Middle Eased improved. The calming of geo-political tensions allowed the USD to retrace some of this week’s losses and the price of oil steadied after having risen c. 7% this week. Risk sentiment further improved on headlines that US President Trump is considering to rejoin the Trans-Pacific Partnership which prompted AUD to rally.
GBP rose during yesterday session with GBPUSD reaching 1.4247 but there were no significant UK or Brexit-related news. Our traders see GBPUSD 1.4245 as an initial resistance level and a break could open up a rally towards 1.4350. EURGBP broke through support around 0.8700 and fell to 0.86425 with the next support coming in at 0.8595, while resistance should lie at 0.8700 and 0.8810.
The ECB’s minutes revealed few surprise but may be interpreted as slightly hawkish following the removal of the easing bias at the last meeting. Barclays Research thinks ”the ECB will err on the side of caution” and made slight downward revisions to its 2018 euro area growth forecast. Regarding monetary policy, Barclays Research pushed out its call for the end of ECB asset purchases from September 2018 until December 2018.
Euro area industrial production surprised to the downside yesterday, which was in line with the continued negative dynamics of business expectations observed in recent surveys. This suggests that the strong growth momentum from H2-17 is likely to have cooled down, and Barclays Research sees “… a downside risk to our euro area growth forecast of 0.5% q/q in Q1-18”.
Singapore’s MAS increased the slope of its SGD NEER policy band ”slightly”, which Barclays Research interprets ”as a 0.5% slope increase”. This reflects the central bank’s confidence about economic growth, although they also noted the risks of a US-China trade war.