GBP: You’re expelled!

The pound was on the back foot yesterday as the stand-off between the UK and Russia continues. As the deadline predictably came and went without the requisite Russian co-operation, Theresa May announced the expulsion of 23 Russian diplomats in response to the attempted murder of a former spy on UK soil. The diplomats have one week to leave the count.

It was also reported that Unilever, one of the world’s largest consumer companies, will consolidate its operations and has chosen Rotterdam as its official HQ. Whilst the timing suggests this move is a reaction to growing concern over the UK prospects post Brexit, Unilever denies this stating that Brexit ‘was absolutely not a factor’. Indeed, the company points to the facts that it will keep its two fastest growing business arms – beauty & personal care and home care – in the UK. be 3 years away.

No major economic data from the UK today so expect the pound to continue to be driven by Brexit news and commentary.

EUR: Dovish Draghi

The EUR was the worst performing major currency yesterday as EU industrial production numbers fell short and Mario Draghi gave a speech emphasising a desire for a slow and cautious approach to interest rate changes. He stated that the EU still faces ‘uncertainties’ so a rate hike plan won’t happen until they are ‘well past’ their bond purchasing program. The ECB president also highlighted the potential impact of the stronger euro on inflation. At the moment inflation is trailing below their target which may be to do with the strong EUR.

Draghi also passed comment on President Trump’s tariffs on steel and aluminium, suggesting there could be more serious consequences on the EU economy further down the line.

Today’s economic data includes French inflation and Greek unemployment numbers. France is one of the keystones of the EU so any uptick in inflation will be viewed as a positive overall for the euro.

USD – Re-shuffle

The dollar was rocked this week, firstly as President Trump sacked his secretary of state Rex Tillerson and secondly, US retail sales missed expectations yesterday. Consumer spending has fallen now for a third straight month.

President Trump also announced a new economic adviser, Larry Kudlow, who is viewed as a conservative economist. Despite his conservatism, he holds similar views to the President on tariffs and tax reform.

Today’s important data consists of initial jobless claims, measuring the number of people filing for first-time claims for unemployment in the US. We will then have export and import price indices measuring the changes in price of imported and exported goods.

CHF – Steady at the Helm

The Swiss central bank holds its quarterly policy meeting today. The market is expecting the central bank to leave rates unchanged despite improving conditions to warrant a change in rhetoric. Inflation remains high and the EU is continuing a steady path of normalisation, which is certainly good news for the Swiss central bank