Markets Report - 06 March 2023

A daily breakdown of the markets for the 6th March 2023, provided to you by Sterlex.

🇪🇺💶Although European Central Bank President Christine Lagarde reiterated in her latest public appearance that a 50 basis points in March is highly likely, ECB policymaker Centeno said on Monday that the decision on the size of the next rate increase must be based on data. Key events in the euro area this week: Germany Construction PMI, EMU Sentix Index, Retail Sales (Monday) – Germany Retail Sales, EMU Advanced Q4 GDP Growth Rate, ECB Lagarde (Wednesday) – Germany Final Inflation Rate, ECB Lagarde (Friday). EUR/USD managed to register small gains last week on the back of Friday's rebound. The pair fluctuates in a tight range at around 1.0650 early Monday. In the domestic calendar, the Construction PMI in Germany improved to 48.6 in February, while the Investor Confidence in the broader Euroland measured by the Sentix Index unexpectedly worsened to -11.1 for the current month. "Interest rates have risen too fast," Centeno added and argued that the ECB should not rush to conclusions very fast.

🇬🇧💷GBP/USD prints mild losses around 1.2030-35 during early Monday, consolidating the first weekly gains in three amid the market’s cautious mood ahead of the key catalysts, as well as fading Brexit optimism. The same shows the DUP’s dislike for the initial details of the EU-UK deal on the Northern Ireland Protocol (NIP) and raises challenges for the smooth passage of the key Brexit developments in the UK Parliament. To avoid any hardships, the British government is bracing to provide more details on how Northern Irish lawmakers can potentially veto new European Union laws. That said, the Democratic Unionist Party (DUP) has urged the Government to stop “overselling” its new post-Brexit deal on Northern Ireland and focus on providing clarity on its detail.

🇺🇸 🏦The positive shift witnessed in risk sentiment late Friday made it difficult for the US Dollar to find demand and the US Dollar Index (DXY) closed the last day of the week in negative territory. “We suspect it is another range-bound week for the Dollar, where DXY continues to trade in a 104.00-105.50 range and local stories can win out” - ING. In the European morning, the DXY moves sideways at around 104.50 and the benchmark 10-year US Treasury bond yield stays below 4%. FOMC Chairman Jerome Powell will testify on policy before the Senate Banking Committee on Tuesday and before the House Financial Services Committee on Wednesday. US stock index futures trade modestly higher on the day, reflecting a cautious atmosphere.