Brexodus23rd February 2019
Sterling was broadly unchanged as markets struggle to find direction after a week of little progress on Brexit talks. The Pound failed to move past the 1.3100 mark as the Irish backstop continues to hold up progress. Investors seem reluctant to dive in ahead of Theresa May’s Brexit statement on February 26th and a meaningful vote in the UK Parliament on February 27th.
In the absence of any major market-moving economic releases, the pair remains at the mercy of incoming Brexit headlines. The overnight intraday downtick came after the European Commission President Jean-Claude Juncker told members of the European Economic and Social Committee he is “not very optimistic” that a no-deal Brexit could be avoided. Reports emerged overnight that up to 30 MPs could rebel against the Government in a bid to prevent a no-deal Brexit.
The Dollar was steady yesterday morning after the Federal Open Marker (FOMC) minutes confirmed the “patient” approach from the Federal Reserve (Fed) and future adjustments would be data-dependent amidst a global economic slowdown.
The belated Durable Goods Orders report for December came out better than expected on the headline but missed on the all-important non-defence ex-air measure with -0.7%, lowering growth forecasts. Existing Home Sales also fell short of projections with 4.94 million annualized, exposing the weakness of the housing sector once again.
No less than four Fed officials will be speaking later today. The most notable ones to watch are Vice Chair Richard Clarida and New York Fed President John Williams. Chair Jerome Powell will testify on Tuesday.
The Euro continued to be hindered by the wider economic concerns in the region, which was compounded by weak PMI prints out of Germany. A slight pickup in the Dollar continued to apply downward pressure on the Euro but the pair was pretty volatile all day. The was a distinct lack of directional bias during the session but it ended pretty much unchanged from the previous day.
Data today includes German GDP figures for month-on-month and year-on-year as well as the IFO business climate numbers for the country. Swiss industrial production is also due today followed by CPI numbers for the Eurozone. The day’s economic data will be rounded off by the European Central Bank’s (ECB) President Draghi’s speech at 3:30 pm GMT.
Data to watch:
07:00 EUR Gross Domestic Product (YoY) (Q4) (Germany)
07:00 EUR Gross Domestic Product (QoQ) (Q4) (Germany)
07:00 EUR Gross Domestic Product w.d.a (YoY) (Q4) (Germany)
07:30 CHF Industrial Production (YoY) (Q4)
N/A CHF Industrial Production (QoQ) (Q4)
09:00 EUR IFO – Business Climate (Feb) (Germany)
09:00 EUR IFO – Expectations (Feb) (Germany)
09:00 EUR IFO – Current Assessment (Feb) (Germany)
10:00 EUR Consumer Price Index – Core (YoY) (Jan)
10:00 EUR Consumer Price Index (MoM) (Jan)
10:00 EUR Consumer Price Index – Core (MoM) (Jan)
10:00 EUR Consumer Price Index (YoY) (Jan)
13:30 CAD Retail Sales ex Autos (MoM) (Dec)
13:30 CAD Retail Sales (MoM) (Dec)
N/A USD Fed Monetary Policy Report
15:15 USD Fed’s Williams speech
15:30 EUR ECB’s President Draghi speech
17:00 USD Fed’s Clarida speech
18:30 USD Fed’s Quarles speech
18:30 USD Fed’s Bullard speech
22:30 USD Fed’s Williams speech
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