UK Retail Sales Data Beats, Chinese Bank Chinese Banks Go On A Lending Binge In Jan

Fundamental analysis of Forex market


  • Some risk aversion sentiment in session as no visible progress on US-China high-level trade talks
  • UK Jan retail sales beat expectations with upward back-month revisions
  • China Jan New Yuan Loans hit a record high at CNY3.23T; hints that monetary easing might be starting to gain more traction


  • Little progress said to have been made in the 2nd day of negotiations in Beijing on core issues increasing pressure on President Trump to extend delay the Mar 1st deadline. US and China officials said to be ‘scrambling’ to at least produce memorandum of understanding (MOU) by end of today, MOU could help pave the way for meeting between Trump and China President Xi
  • China Jan CPI remains muted and hits a 1-year low (YoY 1.7% v 1.9%e)


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  • UK lawmakers rejected a symbolic govt motion that sought reaffirmation of support that sought changes to Brexit deal.
  • PM May has said a no-deal Brexit is “more likely” after Tory Eurosceptics condemned her to another humiliating Commons defeat
  • UK Parliament voted against SNP’s ‘Amendment I’ and Labour’s ‘Amendment A’. UK Lawmakers also voted against Labour’s ‘Amendment A’ 322 to 306 which would have offered a meaningful vote by end of February, and should there not a no deal, then the government had to make a statement on what the next steps will be. UK Lawmakers also voted against SNP’s ‘Amendment I’ 315 to 93 which would have required the Government to negotiate an extension of at least three months to Article 50 process. MP Soubry withdrew ‘Amendment E’ before the vote which would have called for the govt to publish analysis of impact of a ‘no-deal’ Brexit on business and trade
  • Britain to soften its demand that the EU reopen the Brexit withdrawal agreement to solve the Irish backstop issue. Brexit Sec Barclay said to have suggested to the EU’s chief negotiator Barnier during talks this week
  • Norway Central Bank (Norges) Gov Olsen reiterated stance that key policy rate would be raised gradually and cautiously if the economy developed as expected


  • US Congress passed a spending bill keeping the govt open. President Trump stated he would sign and then declare a national emergency to get more border wall funding
  • House Speaker Pelosi (D-CA): might file legal challenge if President Trump declared national emergency over border wall; she would consider options
  • US Commerce Dept was expected to meet Sunday (Feb 17th) deadline to issue auto-related recommendations to President Trump


  • (ES) Spain: As expected PM Sanchez called a snap general election for April 28th Spain after his minority government failed to get the 2019 budget through parliament. The biggest factor to watch here not just for Spain, but the Eurozone and the wider EU, is whether the three right wing parties form an alliance and take over. In Italy, the populists, especially on the right appear to be strengthening their power base and while President Macron managed to hold off the Eurosceptics at the last election, he has also come under severe pressure domestically. The key question for many is to what extent the European parliament elections, held May 23-26, will see populist parties widening their support base.
  • (UK) United Kingdom: Prime Minister May suffered another humiliating defeat in parliament overnight, this time in a motion that was meant to endorse the government’s negotiating strategy. The House voted by 303 to 258. The vote was not legally binding, and a spokesperson for the prime minister confirmed that the government will continue in its efforts to secure concessions on the Irish backstop part of the withdrawal agreement before returning to parliament by no later than February 27. If the government has not secured support for a deal by this time, it would make a statement and table an amendable motion, to which the House of Commons will then vote on. A final vote could be delayed until after a key EU summit on March 21, just a week before the actual exit day.



  • Indices [Stoxx600 +0.3% at 364.8, FTSE +0.2% at 7208, DAX 0.1% at 11097, CAC-40 +0.6% at 5094, IBEX-35 +0.4% at 8984, FTSE MIB +0.1% at 19856, SMI +0.3% at 9169, S&P 500 Futures -0.1%]
  • Market Focal Points/Key Themes: European Indices trade mixed following lower Asian markets and lower US futures after cautious US-China trade related headlines. On the corporate front German Insurance giant Allianz trades higher after inline earnings and guidance; EDF trades over 4% lower after a cautious 2019 outlook; RBS trades higher on earnings while Vivendi trades notably higher after strong earnings. Elsewhere Eni, Bollore and Saab are among other names trading higher on earnings while Eutelsat, Pirelli, Ubisoft and Fingerprint Cards are among the decliners on earnings. On the M&A front Scout24 trades over 10% higher after receiving a €46/shr offer; MDxHealth gains on a positive data presentation while Plus500 continues to fall after a report alleged disclosures made during this weeks earnings contradicts its last annual report raising questions about whether it may have misled shareholders. Looking ahead notable earners include PepsiCo, Deere and Co, Wabco, American Axle and Moody’s among others.


  • Consumer discretionary: Vivendi Universal [VIV.FR] +7% (earnings), Ubisoft [UBI.FR] -1.6% (earnings), Scout24 [G24.DE] +12% (welcomes takeover offer)
  • Energy: Eni [ENI.IT] +0.2% (earnings), Electricite de France [EDF.FR] -4% (earnings)
  • Financials: Allianz [ALV.DE] 1.0% (earnings), Royal Bank of Scotland [RBS.UK] +1.3% (earnings), Euronext [ENX.FR] -1% (earnings), Millenium & Copthorne [MLC.UK] +0.8% (earnings), Plus500 [PLUS.UK] -12% (reports its misled investors)
  • Industrials: Saab [SAABB.SE] +5.5% (earnings), Pirelli [PIRC.IT] -1.5% (earnings), Panalpina Welttransport [PWTN.CH] +8% (confirms in talks on Logistics deal, receive CHF180/shr offer from DSV), Alstom [ALO.FR] 1.5% (analyst action)
  • Technology: Fingerprint Cards AB [FINGB.SE] -2.5% (earnings)


  • UK Commons leader Leadsom: Confident that Parliament will support a deal id Irish backstop changed. Government is determined to keep a no-deal Brexit on the table
  • Spain PM Sanchez said to call for general elections for April 28th (in-line with press speculation)
  • Czech Central Bank Feb Minutes: Majority assessed risks to forecasts as slightly inflationary and tilted towards higher interest rates. Members Benda and Michl dissented and sought a 25bps rate hike in Feb. Some board members viewed new staff forecast as moderately optimistic in regards to growth
  • US Treasury Sec Mnuchin tweeted that had a productive meeting with China Vice Premier Liu He
  • China FX Regulator SAFE reiterated view that cross-border capital flow remained basically stable

Currencies/Fixed Income

  • USD steady despite recent soft US data with the US-China trade talks in focus. The greenback and JPY currencies benfited as some risk aversion sentiment reverberated as no visible progress on US-China high-level trade talks were yet visible.
  • GBP moved off 1-month lows and reversed earlier losses as UK retail sales data handily beat expectations. GBP/USD tested below the 1.28 level as PM may was dealt another Brexit blow in parliament regarding her strategy
  • EUR/USD was lower by 0.1% and holding below the 1.13 level.

Economic Data

  • (NL) Netherlands Dec Retail Sales Y/Y: 0.9% v 4.6% prior
  • (PE) Peru Dec Economic Activity Index (Monthly GDP) Y/Y: 4.7% v 5.3% prior
  • (PE) Peru Jan Unemployment Rate: 6.5% v 6.1% prior
  • (EU) EU27 Jan New Car Registrations: -4.6% v -8.4% prior (5th straight decline
  • (NO) Norway Jan Trade Balance (NOK): 28.8B v 25.0B prior
  • (FI) Finland Dec Current Account Balance: -€0.5B v +€0.1B prior
  • (TR) Turkey Nov Unemployment Rate: 12.3% v 11.8%e
  • (CN) China Jan New Yuan Loans (CNY): 3.20T v 3.000Te
  • (CN) China Jan M2 Money Supply Y/Y: 8.4% v 8.2%e; M1 Money Supply Y/Y: 0.4% v 1.9%e; M0 Money Supply Y/Y: 17.2% v 10.0%
  • (CN) China Jan Aggregate Financing (CNY): 4.64T v 3.31Te
  • (NG) Nigeria Jan CPI Y/Y: 11.4% v 11.4% prior
  • (CN) Weekly Shanghai copper inventories (SHFE): 207.1K v 142.7K tons prior
  • (TR) Turkey Jan Central Gov’t Budget Balance (TRY): 5.1B v -18.1B prior
  • (TW) Taiwan Jan Trade Balance: $0.9B v $3.2Be; Exports Y/Y: -0.3% v -3.5%e; Imports Y/Y: +6.8% v -3.7%e
  • (ES) Spain Jan Final CPI M/M: -1.3% v -1.3%e; Y/Y: 1.0% v 1.0%e
  • (ES) Spain Jan Final CPI EU Harmonized M/M: -1.7% v -1.7%e; Y/Y: 1.0% v 1.0%e
  • (ES) Spain Jan CPI Core M/M: -1.5% v 0.0% prior; Y/Y: 0.8% v 1.0%e
  • (CZ) Czech Q4 Advance GDP Q/Q: 1.0% v 0.7%e; Y/Y: 2.9% v 2.4%e
  • (RU) Russia Narrow Money Supply w/e Feb 8th (RUB): T v 10.13T prior
  • (PL) Poland Jan CPI M/M: 0.1% v 0.1%e; Y/Y: 0.9% v 1.0%e
  • (IT) Italy Dec Total Trade Balance: €3.7B v €3.9B prior; Trade Balance EU: -€0.6B v +€0.5B prior
  • (CN) China Q4 Preliminary Current Account: $54.6B v $23B prior
  • (IT) Italy Dec General Government Debt: €2.317T v €2.345T prior
  • (UK) Jan Retail Sales (Ex-auto/fuel) M/M: 1.2% v 0.2%e; Y/Y: 4.1% v 3.2%e
  • (UK) Jan Retail Sales (including auto/fuel) M/M: 1.0% v 0.2%e; Y/Y: 4.2% v 3.4%e
  • (BR) Brazil Feb FGV Inflation IGP-10 M/M: 0.4% v 0.3%e
  • (EU) Euro Zone Dec Trade Balance (Seasonally Adj): €15.6B v €15.7Be; Trade Balance NSA (unadj): €17.0B v €19.0B prior

Fixed Income Issuance

  • (ZA) South Africa sold total ZAR650M vs. ZAR650M indicated in I/ L 2029, 2038 and 2050 bonds
  • (IN) India sold total INR120B vs. INR120B indicated in 2021, 2027, 2032, 2035 and 2055 bonds

Looking Ahead

  • 05:30 (BR) Brazil Dec Economic Activity Index (Monthly GDP) M/M: 0.0%e v 0.3% prior; Y/Y: 0.0%e v 1.9% prior
  • 06:00 (IE) Ireland Dec Trade Balance: No est v €4.6B prior
  • 06:00 (UK) DMO to sell €3.5B in 1-month, 3-month and 6-month bills (£0.5B, £1.5B and £1.5B respectively)
  • 06:30 (IN) India Weekly Forex Reserves w/e Feb 8th: No est v $400.2B prior
  • 06:45 (US) Daily Libor Fixing
  • 07:00 (IL) Israel Jan CPI M/M: -0.3%e v -0.3% prior; Y/Y: 1.0%e v 0.8% prior
  • 08:00 (UK) Baltic Dry Bulk Index
  • 08:00 (FR) ECB’s Coeure (France) in NY (RU) Russia Jan Industrial Production Y/Y: 1.8%e v 2.0% prior
  • 08:00 (IN) India announces upcoming bill issuance (held on Wed)
  • 08:00 (ES) Spain Debt Agency (Tesoro) announces upcoming issuance
  • 08:30 (US) Feb Empire Manufacturing: 7.0e v 3.9 prior
  • 08:30 (US) Jan Export Price Index M/M: -0.1%e v -0.6% prior; Y/Y: No est v 1.1% prior
  • 08:30 (US) Jan Import Price Index M/M: -0.2%e v -1.0% prior; Y/Y: -1.6%e v -0.6% prior; Import Price Index (ex-Petroleum) M/M: -0.1%e v 0.3% prior
  • 08:30 (CA) Canada Dec Int’l Securities Transactions (CAD): No est v 9.5B prior
  • 09:00 (CA) Canada Jan Existing Home Sales M/M: -0.6%e v -2.5% prior
  • 09:00 (BE) Belgium Dec Trade Balance: No est v -€1.0B prior
  • 09:15 (US) Jan Industrial Production M/M: 0.1%e v 0.3% prior; Capacity Utilization: 78.7%e v 78.7% prior; Manufacturing Production: 0.0%e v 1.1% prior
  • 09:55 (US) Fed’s Bostic
  • 10:00 (US) Feb Preliminary University of Michigan Confidence: 93.5e v 91.2 prior
  • 10:00 (US) Q4 MBA Mortgage Foreclosures: No est v 0.99% prior; Mortgage Delinquencies: No est v 4.47% prior
  • 10:45 (IT) ECB’s Angeloni (Italy, SSM member)
  • 13:00 (US) Weekly Baker Hughes Rig Count data
  • 16:00 (US) Dec Net Long-term TIC Flows: No est v $37.6B prior; Total Net TIC Flows: No est v $31.0B prior

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