EU Leaders Agree to Shore up the Budget as Brexit Bites

EU European Council Meetings took place on Friday and EU Council President Donald Tusk made the following comments: EU leaders agreed to spend more on migration, defence and security and all EU leaders are ready to work to modernize the budget, some ready to contribute more. Reaching an agreement on the budget this year appears difficult. EU leaders endorse downsizing European Parliament to 705 seats from 751 seats. He hopes to get more clarity on British views on future relations after Brexit discussions next week. German Gross Domestic Product w.d.a (YoY) (Q4) was as expected, unchanged at 2.9%. Gross Domestic Product (QoQ) (Q4) was as expected at 0.6%, from 0.6% previously, that was revised up to 0.7%. Gross Domestic Product (YoY) (Q4) was also as expected, at 2.3%, from 2.3% prior, that was revised down to 2.2%. EURUSD fell 1.22934 to a low of 1.22795. Eurozone Consumer Price Index – Core (YoY) (Jan) was released, coming in as expected, unchanged at 1%. Consumer Price Index (MoM) (Jan) was as expected at -0.9%, from 0.4% previously. Consumer Price Index (YoY) (Jan) was as expected, unchanged at 1.3%. Consumer Price Index – Core (MoM) (Jan) was -1.7% v an expected -1.6%, from 0.5% prior. EURUSD moved higher from 1.23046 to a high of 1.23172 due to this data. UK BOE Ramsden spoke at a panel discussion titled “Tackling the UK’s Productivity Challenge” at the East of England Confederation of British Industry event, in Cambridge. He made the following comments: The MPC’s judgement is that productivity growth will settle at just over 1% over the next three years. Structural shocks to the economy from Brexit can’t be offset by monetary policy. The pace of productivity influences what happens to inflation. Still no confirmation that productivity pickup is sustained in the near-term. UK business investment has been unusually weak relative to past recoveries. There are significant risks in both directions to the outlook for productivity. Naturally lower productivity growth and the dampening effect of Brexit are risks to productivity. Canadian Consumer Price Index (MoM) (Jan) was 0.7% v an expected 0.4%, from -0.4% previously. BOC Consumer Price Index Core (YoY) (Jan) was as expected, unchanged at 1.2%. BOC Consumer Price Index Core (MoM) (Jan) was 0.5% v an expected 0.7%, from a prior -0.5%. Consumer Price Index (YoY) (Jan) was 1.7% v an expected 1.4%, from 1.9% previously. Consumer Price Index – Core (MoM) (Jan) was 0.2% v 0.1% previously, which was revised up to 0.2%. USDCAD dropped down from 1.26987 to a low of 1.26166 before recovering to 1.26948 after this release. US Fed’s Dudley and Federal Reserve Bank of Boston President Rosengren spoke on a panel discussion about the Fed’s balance sheet at the United States Monetary Policy Forum, in New York. They made the following comments: Dudley: QE still useful tool at zero lower bound. Bond portfolio run-down essentially on autopilot: has not disrupted markets. We should not care about treasury yields alone. The balance sheet is likely returning to 2 …