Morning Market Update – Euro at Risk

Asian Markets

Trudeau Government presented the Canadian Federal Budget on Wednesday. Finance Minister Bill Morneau staged his second budget with a document giving out details about the government’s estimated income and expenditure with no major tax changes. The federal budget revised its deficit by raising it to $23 billion and forecasts the deficit to $28.5 billion in the upcoming year.

The key features of the budget include:

Trend: Higher deficits for next three years before dropping to $18.8 billion in 2021–22

Housing: As discussed and budget earlier, $11.2 billion over 11 years and make way for a national housing strategy

Defence: $8.4 billion in capital spending for equipment pushed forward to 2035.

The Reserve Bank of New Zealand (RBNZ) maintained the interest rates at 1.75% and the official cash rate (OCR) at 1.75%. The interest rates reduced from 2.00% to 1.75% in the November 2016 meeting.

RBNZ’S Wheeler stated that “Monetary policy will remain accommodative for a considerable period. Numerous uncertainties remain, particularly in respect of the international outlook, and policy may need to adjust accordingly.”  Despite of a poor growth in Q4, the RBNZ is convinced of a positive growth in the future.  According to the bank, the house-price inflation has become less intense and we expect the inflation rates to remain moderate and sustained in the days to come.

Other Markets

Moving on for the day, we have the GfK’s Consumer Confidence that measures the level of consumer confidence in economic activity. We have the pound retail sales released by the National Statistics which looks very good when compared to the previous month which stood at 1.5% and now forecasted at 2.6%. The retail sales ex-fuel released by the National Statistics looks better than the previous month’s data which was seen at 2.6% and now forecasted at 3.1%.

The Counting Jobless Claims released by the US Department of Labor looks better and are forecasted at 2.035M. We must look out for Janet L. Yellen’s speech today which will give us some insights for the dollar. The total number of New Home Sales released by the US Census Bureau came at 0.565M when compared to the previous month’s value at 0.555M.

The dollar has been weak after the FOMC and there may be few releases today which will boost the greenback. The European Central Bank’s long-term refinancing operation and Consumer Confidence will be released today. The Euro might see a downfall as the Consumer Confidence shows a weaker data at -5.7.