Macro Roundup (Sep 18)

SHANGHAI, Sep 18 (SMM) – This is a roundup of global macroeconomic news last night and what is expected today.

Last night

The US dollar index slumped against the euro and sterling, which were buoyed by optimism that Britain would reach a deal with the European Union (EU) on the terms of its departure from the trade bloc.

Base metals closed mixed as LME lead led the gains and closed 1.52% higher. LME zinc increased 0.89%, copper rose 0.76%, SHFE copper grew 1.11%, lead went up 0.88%, zinc nudged up 0.76%, and aluminium closed 0.17% higher. Other base metals inched down. 

Brexit negotiations between the EU and Britain on Brexit are conducted in a spirit of "good cooperation", Michel Barnier, the EU's chief negotiator, said on Monday. British Prime Minister Theresa May said to the Conservative Party that the alternative to her potential Brexit deal is simply having no deal. 

Britain is due to leave the EU on March 29, 2019 but no full exit agreement has been reached. Reports of progress on the Irish border discussion bolstered the pound. 

The eurozone consumer price index (CPI) was finalised at 2% in August, down from 2.1% in July. That was still notably higher than 1.5% back in August 2017. Core CPI was finalised to increase 1% on a yearly basis. 

ECB executive board member Benoit Coeure urged the central bank to give more details in the forward guidance, for the pace of rate hike. He said that, "should economic conditions warrant, there might be a case for the Governing Council to go beyond the timing to lift-off (rates) in further clarifying the pace at which it expects to remove policy accommodation".

"A further clarification of our reaction function might help market participants and the broader public to better anticipate the likely future path of short-term interest rates," he added. 

Currently, the ECB's plan is to half the monthly asset purchase to €15 billion starting October, and to end it after December. Interest rates would stay at present levels through the summer of 2019.

Day ahead

Market participants should monitor the US National Association of Home Builders market index for September.