Yesterday inflation figures rose more than forecasted, strengthening the GBP and CAD considerably. Mixed US housing market data later did not move the market, but today's FOMC statement will...

Overnight News Bullets

• GE PPI MoM/YoY (Feb) out at 0.3%/2.8% as expected.
• SZ PPI MoM/YoY (Feb) out at 0.3%/2.2% vs. 0.1%/2.2% expected.
• UK CPI MoM/YoY (Feb) out at 0.4%/2.8% vs. 0.3%/2.7% expected. Core CPI YoY at 1.7% as expected.
• UK RPI MoM/YoY (Feb) out at 0.7%/4.6% vs. 0.5%/4.3% expected. RPI Ex. Mort. Int. Payments YoY at 3.7% vs. 3.5% expected.
• UK Public Sector Net Borrowing (Feb) out at 1.0B vs. 2.3B expected. Public Finances (PSNCR) out at 1.9B vs. 2.0B expected.
• UK M4 Money Supply MoM/YoY (Feb P) out at 0.9%/12.8% vs. 0.8%/12.8% expected. M4 Sterling Lending (Feb P) at 20.7B vs. 15.6B expected.
• CA CPI MoM/YoY (Feb) out at 0.7%/2.0% vs. 0.3%/1.6% expected. Bank of Canada CPI MoM/YoY (Feb) out at 0.5%/2.4% vs. 0.3%/2.1% expected.
• US Housing Starts (Feb) out at 1525K vs. 1450K expected. Prior at 1399K (revised from 1408K).
• US Building Permits (Feb) out at 1532K vs. 1550K expected. Prior at 1571K (revised from 1568K).
• AU DEWR Skilled Vacancies (Feb) out at -2.0% vs. -1.5% prior (revised from 0.5%)

Markets

• FX: GBP and CAD higher after surprise in CPI.
• Fixed Income: Bunds dropped y??™day, 10yrs rose. JGB??™s rising a tad today.
• Stocks: Both the EU and US gaining y??™day. Nikkei closed today.
• Commodities: Precious metals still edging higher. Crude trading on support.
   

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Calendar

Today's Highlights:

This and Next Week??™s Highlights:

What's going on?

• FOMC tonight will be quite important in giving direction. Will they indicate a tightening and kill the housing market to reduce inflationary pressure or vice versa? We think, they will do nothing and try to wait it out. They could point to the weak housing market and the high core inflation as balancing each other out in the mid-term??¦
• Carry Trade crosses still looking strong, but USDJPY not able to close above its 200-day moving average (117.68)
• Equities closing on a strong note. S&P500 making new highs for March.
• Fixed Income looking tired. FOMC could be a tipping point.
   

FX