One needs to be philosophical when viewing the US news cycle of late, bearing in mind that the only certainty is change.  US President Trump, combating the rather challenging start to his administration, hosted a 77-minute unscripted press conference where he, for better or worse, returned to the largely successful form of ‘Candidate Trump’ (Bloomberg).  At the same time, Secretary of State Rex Tillerson joined the G20 Summit in Bonn, while VP Mike Pence heads to Germany to soothe ruffled feathers of EU leaders, following several off-the-cuff remarks from President Trump noting the prominence of the German centrist policy among the bloc (Bloomberg). EURUSD not surprisingly finds support at technical level, and coincident 55-day moving average, 1.0600 halting a US dollar rally.  This is not to say trading is one-directional because Fed Chair, Janet Yellen intimated that monetary policy action was not necessarily tied to clarity – or equally lack thereof – over the Trump policy agenda.  This is a good thing because if recent headlines are anything to go by, Trump Administration policy objectives are a moving target.

 

EUR

While French presidential candidate Macron said he would be tough in Brexit talks, Austria’s Chancellor said the ‘EU must ensure the US is in a worse situation when it leaves, otherwise it would represent a “capitulation”.

Emmanuelle Macron, the current favourite in the polls to win the position of French president, said: “I will be pretty tough because we have to preserve the rest of the union”. Meanwhile, incumbent Chancellor of Austria Christian Kern spoke reiterating that any member of a club must have better conditions than a non-member. At the same press conference, EC president Jean-Claude Juncker voiced his concerns again about European unity in the face of negotiations with the UK. He has fears that Theresa May and the UK government may be able to splinter the member states by individual negotiations on specific arrangements for certain industries.

 

GBP

Core CPI, a measure of inflationary pressure facing consumers but excluding volatile food, energy, alcohol, and tobacco items, which has reached a 29-month high, is scrutinised by the Bank of England because it is understood to be a more reliable determinant of medium term inflationary trends.  Good news on the face of it but still a way off the two per cent watermark, the Bank of England’s Monetary Policy Committee use to determine the timing of policy action.  Despite the depreciation of the pound following the EU Referendum, the recent CPI readings, both Core and Headline, have undershot expectations.

The retail sales number, another metric closely scrutinised for inflationary trends, was due for release yesterday.  Last month’s reading of -1.9per cent, nearly a five-year low, presents a somewhat concerning picture despite the underlying volatility of monthly reported figures.  The pound is unlikely to find further support unless the fundamental picture begins to exhibit more traction, bearing in mind that there is virtually no key UK data until the Inflation Report Hearings on February 27.

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