UK industrial production awaited

Today's Highlights

Aussie consumers gain confidence, well sort of

Banking sectors causing concern

UK industrial production awaited

FX Market Overview

Financial markets around the world are trying to assess whether the credit problems at Deutsche Bank are just an isolated problem or whether this is symptomatic of a much wider malaise. The question of whether this is the starting point for another credit crunch is unanswerable at this stage but it has stopped the Euro in its tracks and allowed the Pound but the US Dollar, which is also losing some of its lustre, has fallen back from $1.08 to $1.1340 in the last 10 days.

The Sterling – Euro exchange rate found GBP buyers at the 50% retracement level between the 2009 low and the 2015 high. That half way marker is at 1.2805 and the Pound looked very oversold at that point. So, technically speaking, we ought to see some form of recovery in the value of the Pound in this exchange rate and, if fears grow over the state of EU banks, weakness in the Euro could be the trigger for that.

We heard overnight that Australian Consumer confidence rose an unexpectedly positive 4.2% in February but within the data, niggling fears over job security are lurking in the background and when asked whether this was a good time to invest in a new home, the figure dropped by 12%. With the falls in commodity markets and the pressure that puts on Australian employers, this isn't a surprise and neither is the fact that the Sterling – Australian Dollar is trading at the top of its current range, even if that range consists of a downward trend.

This morning has already brought us French Industrial Production which was much worse than expected. The markets generally thought we would see a tiny 0.2% rise in IP but the announcement revealed a 1.6% drop. Whilst France is only a component of the Eurozone, it is an important one and this was bad news.

The day ahead brings us UK Manufacturing and Industrial output. The trade deficit may have worsened as overseas markets struggle and UK consumers, buoyed by improved confidence, get out to the high streets but we are expecting a marginal improvement in both of these data sets. Sterling has had a very bumpy ride over the last few weeks but this may calm the nerves a tad.

The rest of the day is pretty quiet other than a few speeches from Federal Reserve members and the US Treasury Balance. None of this will be earth shattering, so events in the Eurozone banking sector and in the equities markets are the likely focus.

And have you decided what you will give up for Lent yet. I have decided to give up making commitments I won't keep. Or have I broken that already?