European FX Outlook: Theresa May’s bittersweet symphony of post-Brexit world

What you need to know before markets open:

• The Federal Reserve chairman Jerome Powell delivered his Congressional testimony for the second time this week in which he presented same introductory statement while expressing a bit more conservative optimism about the growth and interest rate outlook.
• The Eurozone manufacturing PMI confirmed slight deceleration from recent multi-year highs but remained strong.
• The political declaration of the UK Prime Minister Theresa May delivering her own vision of post-Brexit relationship with the EU headlines the day.

Friday’s market moving events

• Tokyo CPI excluding fresh food rose 0.9% in February while headline inflation rose 1.5% y/y.
• Japan’s unemployment rate fell to 2.4% in January, beating the market expectations.
• German retail sales are seen rising 0.9% m/m and 3.5% y/y in January.
• ECB executive board member Yves Mersch speaks at KPMG Finance Forum 2018 in Prague, Czech Republic at 8:10 GMT.
• The UK Prime Minister Theresa May is due to speak about Britain's post-Brexit relationship with the European Union, in London.
• The UK construction PMI is expected to rise to 50.5 in February.
• The Bank of England Governor Mark Carney is scheduled to speak about the evolution of money and the emergence of cryptocurrencies, in London at 10:00 GMT.
• The Eurozone PPI is set to decelerate to 1.6% m/m in January.
• Canada’s Q4 2017 GDP is expected to rise 2.0% Q/Q annualized.
• University of Michigan consumer confidence is expected to fall to 99.5 in February.

Major market movers

• The US Dollar was little change against majors, easing off peaks against EUR, but retained gains against GBP.
• The future of the UK and GBP is at stake with Theresa May speaking, but markets may see that future too far away to react as well.

Thursday’s macro summary

• China’s Caixin manufacturing PMI rose to 51.6 in February.
• Spanish Q4 GDP is set to rise 3.1% y/y.
• Spanish manufacturing PMI rose to 56.0 in February with new orders rising to 13-month high.
• Italian final manufacturing PMI fell to 56.8 in February, the lowest since September 2017.
• French final manufacturing PMI decelerated to 55.9 in February.
• German final manufacturing PMI dipped to 60.6 in February.
• The Eurozone manufacturing PMI ticked up to  58.6 in February.
• The UK manufacturing PMI decelerated to 55.2 in February.
• The Eurozone unemployment rate remained stable at 8.6% in January.
• The US personal spending rose 0.2% m/m as expected in January while personal income rose 0.4% m/m.
• The US weekly jobless claims reached 210K in a week ending February 23, falling to the lowest level in four decades.
• The US ISM manufacturing PMI rose to 60.8 in February, up from 58.4 in January.
• The second day of Fed chairman’s Congressional testimony basically repeated the previous statements on the optimistic growth outlook.
• The New York Federal Reserve President William Dudley speaking at a trade conference in Brazil said that trade limits won't affect trade deficit, just trade composition and that raising trade barriers would likely hurt productivity growth.