Key outcomes of Global data and looking ahead - ANZ

Analysts at ANZ explained the economic data outcomes of overnight.

Key Quotes:

"Although wider for the entire year of 2016, the US current account deficit narrowed to USD112.4bn in Q4. The market was expecting the one-off soybean exports over Q3 would wash out of the data, driving a wider deficit. However, the primary income component swung into a surplus of USD19.9bn.

UK inflation overshot expectations in February coming in at 2.3% y/y (exp. 2.1% y/y). The BoE expects inflation to peak around 2.75% early next year. February core inflation rose 2.0% y/y, up from 1.6% y/y in January. That would suggest that sterling's weakness is feeding through into underlying price pressures.

The BoE has said that it will tolerate inflation overshooting for a period of time, but that there are limits. It has also said that if aggregate demand performs stronger than expected, interest rates may have to rise sooner. Retail sales tonight will be important and sterling is trading well into the Article 50 announcement next Wednesday. Canadian retail sales came in firmer than expected, up 2.2% m/m (mkt: 1.5%) from an upwardly revised. The data add to the continued out-performance of Canadian releases of late.

The Citi Surprise index is now at the highest level since 2010. Bank of Canada has yet to acknowledge the better data instead noting continued slack in the labour market, elevated uncertainty, and diverging growth prospects with the US. The BoC is likely going to have to upgrade its economic assessment over the short term."