The CBI retail sales index retreated to 14 for February from 28 previously and below consensus forecasts of 25. Sales are expected to be close to the seasonal average for March while there was further strong upward pressure on prices. The latest ONS data indicated that retail footfall was only marginally below February 2020 levels. Bank of England chief economist Pill stated that inflation was uncomfortably high, but he added that the central bank would seek to bring fast-rising inflation down in a measured way that doesn’t disturb the rest of the economy.
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The Euro was able to demonstrate some resilience in early Europe on Thursday as markets continued to monitor Ukraine events closely. Selling pressure on the single currency gradually increased amid fears over the economic impact on the Euro-zone and confidence then deteriorated sharply, especially following reports that Russian forces had entered the Kyiv region while there were further attacks on Ukraine military targets. Euro losses accelerated, especially with speculation that the ECB would be forced to back away from any move to tighten monetary policy, although there was still a high degree of uncertainty, especially as the surge in energy prices will put further near-term upward pressure on inflation.
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11:15 ECB’s President Lagarde Speech
The dollar also gained significant defensive demand as risk conditions deteriorated and commodity currencies declined sharply. There were also expectations that the US economy would be hit less badly than Europe. Commentary from Federal Reserve officials will still be watched closely given the possibility that there will be a change to the March policy decision. The Euro slumped to 20-month lows close to 1.1100 while the dollar index posted a 20-month high on defensive demand. Sanctions imposed by Western countries concentrated on financial measures and individuals with no move at this stage to block commodity exports.
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13:30 USD Durable Goods Orders (Jan) Forecast 0.8% Previous -0.7%
13:30 USD Nondefense Capital Goods Orders Forecast 0.5% Previous 0.3%