Halifax reported a 0.8% increase in house prices for February, below expectations of 0.8%, although the year-on-year increase at 10.8% from 9.7%. UK data releases had little impact with markets focussed firmly on risk conditions and Ukraine developments. After dipping to lows, Sterling attempted to rally against the dollar as equities rallied and energy prices retreated. Risk appetite dipped again after the New York open which triggered fresh selling pressure on the UK currency and fresh lows. There were concerns over the UK economic outlook, especially with further damage from the surge in energy prices. BRC data reported a like-for-like retail sales increase of 2.7% in the year to February and below expectations of 4.7% with unease over the impact of surging energy prices on discretionary spending. Sterling dipped to fresh 16-month lows against the dollar in early Europe on Tuesday.
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German factory orders increased 1.8% for January after a 3.0% increase the previous month and above expectations of 1.0%. The Euro-zone Sentix investor confidence index retreated sharply to a 16-month low of -7.0 for March from 16.6 previously and below expectations of 5.3 as the Ukraine conflict sapped confidence. The economic data releases had little overall impact with markets focussing on fears over the regional outlook as the potential for economic damage from the Ukraine conflict intensified. In particular, there were concerns over the impact of a surge in energy prices. During Monday, markets focussed on the potential for fresh energy sanctions against Russia and the potential ban on imports from Russia. Euro-zone countries, especially Germany and Italy remain very dependent on Russian gas and any ban would, therefore, have a very serious impact on the economy. The Euro rallied during the European session amid reports that EU officials were not prepared to ban Russian energy exports outright. There were also reports late on Monday that the EU will announce a plan on Tuesday to reduce Russian gas imports by over 60% in 12 months while the US may act alone to ban Russian oil imports.
10.00 Gross Domestic Product (QoQ) (Q4) Exp. 0.3% Prev. 0.3%
10.00 Gross Domestic Product (YoY) (Q4) Exp. 4.6% Prev. 4.6%
The US employment trends index strengthened to 119.2 for February from a revised 118.2 the previous month and the strongest reading for over four years. US Treasuries dipped at the New York open with a rally in equities helping to limit support for bonds. As US yields moved higher, the dollar gained an element of support. The Federal Reserve is in a blackout period ahead of next week’s policy decision with risk trends tending to dominate.
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