02/03/2018 - ECB Expected To Remain Neutral in March Meeting

EUR

Yesterday there were reports that European Central Bank officials are likely to discuss a small tweak in policy at their March 8 meeting although no major changes are expected, three sources with direct knowledge of the discussion stated. Concerned about recent market turbulence, the strong euro and a dip in both headline and underlying inflation, officials prefer waiting, perhaps as late as the summer, before starting to signal the end of asset buys. The ECB has bought more than 2 trillion euros worth of bonds to boost benign inflation rates, with the ECB expected to shut its bond purchase scheme by the end of the year, satisfied that higher economic growth will lift the consumer Price index.

USD

Federal Reserve Chairman Jerome Powell said Thursday that there are no "decisive" signs of wage inflation yet the new central bank head also said more gains can come in the labor market without causing harmful levels of inflation. He also said he expects to continue to hiking rates gradually as it looks to keep economic growth in check while not upsetting the economic recovery

U.S. consumer prices increased in January, with a gauge of underlying inflation posting its largest gain in 12 months, bolstering views that price pressures will accelerate this year.

The Commerce Department said on Thursday consumer prices as measured by the personal consumption expenditures (PCE) price index, rose 0.4 percent. That was the biggest increase since September and followed a 0.1 percent gain in December.

Markit's US final manufacturing purchasing managers' index fell to  55.3 from January's 34-month high of 55.5. Markit’s chief business economist said: "US factories are enjoying one of the best growth spells seen since 2014, boding well for the sector to make a solid contribution to GDP in the first quarter. The survey's output index readings for the first two months of 2018 are indicative of the sector growing at an annualized rate of just under 3%.

Key Announcements

09:30 - GBP: Consruction PMI; Forecast at 50.5 against a previous of 50.2

TBA-  GBP: Theresa May “Brexit Roadmap” Speech

10:00 - GBP: BoE Governor Mark  Carney makes a Speech