Morning Report

March 26, 2024

“Core PCE and some key Fed speakers are the dominant events on the calendar this week, although we will have to wait for next week to see the market reaction. For today, we have a string of US data that includes durable goods and consumer confidence that will provide some catalysts for price action in the dollar.”

Tim Hallinan – Trading Director


Main Headlines

A German GfK consumer sentiment survey released this morning indicated a slight improvement, rising to -27.4 from a revised -28.8 in March. This surpassed analysts’ expectations of -27.8, indicating that fewer households feel the need to save despite lingering uncertainty about Germany’s economic outlook.

In the UK, market researcher Kantar released data indicating that grocery price inflation eased to its lowest level since February 2022 at 4.5%, compared to 5.3% in the previous period. Despite this decline, however, nearly a quarter of British households still consider themselves financially struggling, according to Kantar.


Sterling lifted from its one-month low yesterday as it staged a modest recovery from last week’s BoE-induced slide. As a result of the commentary last week, the most interesting development for the pound over the past few sessions involves a dovish repricing of the market-implied rate trajectory, which now places a 25% probability that the Bank of England eases policy at its next meeting – more than the ECB or the Fed, both of whom are further along the disinflation pathway. Hawk Catherine Mann revealed little in a speech yesterday, noting only that her vote to hike at the previous meeting was ‘finely balanced’.


With Spanish CPI eyed tomorrow, the euro has recovered around 0.4% from its lows reached early on Monday. A couple of ECB speakers yesterday joined the dovish chorus that is increasingly pointing to June as the timing for the first cut – Panetta indicated that the Governing Council is finding growing support for rate cuts over the past few weeks, while Chief Economist Lane was upbeat as he said that wage growth is normalising as expected. German GfK Consumer Climate inched higher after dipping over the last few months, and Spanish CPI tomorrow morning is the next key piece of data for the eurozone, which is expected to tick up from 2.8% to 3.1% and may – if supported by strong prints across the bloc – cast doubt over the ECB’s willingness to cut imminently.


The dollar dipped yesterday as traders trimmed some of its recent rally. The only notable event yesterday was a typically hawkish speech by the Fed’s Bostic, who stuck to his expectation for one cut this year and reiterated the risks associated with easing policy too early, although this did little to add some strength to the greenback. The data flow picks up today, however, with durable goods orders set to rebound from a very disappointing -6.2% in January to grow 1.2% in February. The Conference Board Consumer Confidence index is then likely to consolidate at around the highest levels reached over the past year. The risk surrounding Friday’s core PCE print is keeping markets tentative in the meantime, where the consensus points to a 0.3% month-on-month number that is unlikely to bolster the Fed’s confidence that inflation is heading in the right direction.


Stocks were mixed and the three major US stock indexes ended marginally in the red yesterday a Friday’s core PCE print looms over markets and keeps risk assets under pressure. Chinese assets came under strong pressure after the US and UK accused the Chinese state of supporting cyberespionage of lawmakers’ emails over multiple years, while trade tensions flared up again with China seeking to block Intel and AMD chips on government computers.

Main Economic Events (All Times CET)

8:00am: German GfK Consumer Climate
1:30pm: US Durable Goods Orders m/m
3:00pm: US CB Consumer Confidence


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