President Donald Trump delivered his first State of the Union Address last night from Capitol Hill. He said that he wants Congress to produce legislation that generates at least $1.5 trillion for new infrastructure investment. Every federal dollar for infrastructure should be leveraged by partnering with state and local governments and tapping private sector investment. Infrastructure permitting approval process should be streamlined down to one or two years. He commented that the US is seeing rising wages on the strength of the economy. On Trade, he said "We will protect American workers and American intellectual property." On North Korea, he said that it could very soon threaten the US and he would not make the same mistakes of previous administrations. Overall the speech struck a positive tone. USD/JPY moved higher from 108.741 to 109.084.
Tonight will be the last FOMC meeting for the current Fed Chair Janet Yellen. No change is expected with the rate to be left at 1.5%. The release won’t be accompanied by a press conference or a forecast update which may result in a non-event. The last hike was in December and the current consensus is for three hikes this year. The next meeting in March will see Jerome Powell take over as chair. Therefore, the statement could be very similar to last month's to avoid limiting his first meeting.
UK Consumer Credit (Dec) was £1.52B against an expected £1.30B, from £1.40B previously, revised up to £1.5B. Mortgage Approvals (Dec) was 61.039K v an expected 63.500K, from 65.139K prior, which was revised down to 64.712K. GBP/USD rallied from 1.40221 to a high of 1.41042 following the data being released.
Eurozone Gross Domestic Product s.a. (QoQ) (Q4) was as expected, remaining unchanged at 0.6%. Gross Domestic Product s.a. (YoY) (Q4) was 2.6% v an expected 2.7%, from 2.6% previously. Services Sentiment (Jan) was 16.7 v an expected 18.6, from 18.4 previously, which was revised down to 18.0. Consumer Confidence (Jan) was as expected, remaining unchanged at 1.3. Industrial Confidence (Jan) was 8.8 v an expected 9.0, from 9.1 previously, which was revised down to 8.8. Economic Sentiment Indicator (Jan) was 114.7 against an expected 116.3, from 116.0 previously, which was revised down to 115.3. Business Climate (Jan) was 1.54 v an expected 1.69, from 1.66 prior, revised down to 1.60. EUR/USD rose from 1.23943 to 1.24406 after this release.
German Harmonised Index of Consumer Prices (YoY) (Jan) was as expected, unchanged at 1.6%.
US S&P/Case-Shiller Home Price Indices (YoY) (Nov) was as expected at 6.4%, from a prior reading of 6.4%, which was revised down to 6.3%. EUR/USD sold off from 1.24260 to a low of 1.24033 before recovering and hitting a high of 1.24536.
Bank of England Governor Mark Carney testified before the House of Lords Economic Affairs Committee in London. He said that he expects investment in the UK to pick up in 2019, with clarity on Brexit supporting investment. He added that he expects inflation to remain above 2% in the near future due to the effects of the pound.
EUR/USD is up 0.35% overnight, trading around 1.24456.
USD/JPY is down -0.09% in early session trading at around 108.675.
GBP/USD is down 0.38% to trade around 1.41973.
USD/CAD is down -0.27%, trading around 1.23005.
Gold is up 0.40% in early morning trading at around $1,343.80.
WTI is unchanged this morning, trading around $63.98.
Major data releases for today:
At 07:45 GMT, French Consumer Price Index (EU norm) (YoY) (Jan) will be released with an expected 1.1% from 1.2% previously.
At 09:00 GMT, German Unemployment Change (Jan) is expected to be -17K from -29K previously. Unemployment Rate s.a. (Jan) is expected to be unchanged at 5.5%. EUR crosses could be affected by this data.
At 10:00 GMT, eurozone Unemployment Rate (Dec) is expected to be unchanged at 8.7%. Consumer Price Index – Core (YoY) (Jan) is also expected to be unchanged at 1.0%. Consumer Price Index (YoY) (Jan) is expected to be 1.3% from 1.4% previously. EUR pairs may be moved by this release.
At 13:15 GMT, US ADP Employment Change (Jan) is expected to be 185K from 250K previously. Employment Cost Index (Q4) is expected to come in at 0.6% from 0.7% previously. USD crosses could see an increase in volatility from this data release.
At 14:45 GMT, US Chicago Purchasing Managers’ Index (Jan) is expected to be 64.1 against a prior read of 67.8, which was revised up from 67.6.
At 15:00 GMT, Pending Home Sales (YoY) (Dec) is expected to be -0.2% against a prior reading of 0.6%. Pending Home Sales (MoM) (Dec) is expected to be 0.4% against a prior reading of 0.2%.
At 19:00 GMT, US Fed’s Monetary Policy Statement and Interest Rate Decision, which is expected to be left unchanged at 1.5%. USD crosses may experience volatility during this time.