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UK Data

• During the week Halifax House Prices for February. Previous 0.0%m/m & 4.5%y/y
• Monday 9.30am CIPS Manufacturing PMI for February. Previous 50.6 index
• Wednesday 12.01am Nationwide Consumer Confidence for February. Previous 81.0 index
• Wednesday 9.30am CIPS Services PMI for February. Previous 52.5 index
• Thursday 12.00pm BoE MPC Interest Rate Announcement

Sterling was left largely sideling last week after Q4 GDP was left unrevised at 0.6%q/q despite a sharp slowdown in consumer spending. The Nationwide house price survey fell for a forth consecutive month posting its lowest rate of inflation for 2 years, indicating that the housing slowdown is showing little sign of abating. This coupled with disappointing mortgage approvals, already at historical lows puts further pressure on the BoE to cut interest rates sooner rather than later. In consequence, the markets attention now shifts to Thursday’s BoE rate announcement where rates are expected to remain on hold at 5.25% following a rather hawkish quarterly inflation report earlier in the month.

US Data
 

• Monday 3.00pm ISM Manufacturing Survey for February. Previous 50.7 index
• Wednesday 1.15pm ADP Employment Survey for February. Previous 126k
• Wednesday 3.00pm Factory Orders for January. Previous 2.3%m/m
• Wednesday 3.00pm ISM Non-Manufacturing Business Activity for February. Previous 41.9 index
• Thursday 3.00pm Pending Homes Sales for January. Previous -1.5%m/m
• Friday 1.30pm Non-Farm Payrolls & Unemployment Rate for February. Previous -17k & 4.9%

The Dollar continued to weaken last week after US consumer confidence levels fell to a 5 year low and expectations slumped to a 17 year trough, fuelling fears that the US economy is in the midst of a recession. We also saw US producer prices jumping higher on rising energy costs posting their biggest 12 month gain in 21 years. This makes the Fed’s role a lot more difficult in the coming months as slower economic growth is accompanied by inflationary pressures. US Non-farm payrolls takes centre stage in this week after US Labour Department data showed first-time claims for jobless benefits increased by 19,000 last week, a level considered to be near-recessionary by some and raising risks of a poor monthly payrolls report.

EU Data

• Monday 9.00am Manufacturing PMI (Flash Estimate) for February. Previous 52.8 index
• Monday 10.00am HICP (Flash Estimate) for February. Previous 3.2%y/y
• Tuesday 10.00am GDP (Preliminary Estimate) for Q4. Previous 0.4%q/q & 2.3%y/y
• Tuesday 10.00am PPI for January. Previous 0.1%m/m & 4.3%y/y
• Wednesday 9.00am Services PMI (Flash Estimate) for February. Previous 50.6 index
• Wednesday 10.00am Retail Sales for January. Previous -0.1%m/m & -2.0%y/y
• Thursday 12.45pm ECB Interest Rate Announcement, followed by news conference at 1.30pm

The Euro surged across the board last week, notably breaching 1.50 against the Dollar, boosted by an unexpected pick up in German corporate sentiment. The Euro extended gains, as data continued to support the view that the European Central Bank will keep interest rates on hold for the foreseeable future. Headline inflation in the Eurozone stood at 3.2% in January, tallying with earlier estimates as food and energy prices leapt higher. Meanwhile, unemployment in the Eurozone held at a record low of 7.1% in January. Market attention now focuses on this week’s ECB interest rate announcement, but perhaps more importantly to Jean-Claude Trichet’s rhetoric in the following news conference amid reconfirmed Eurozone inflationary pressures.

Interest rate outlook