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Daily Brief

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Praying for time

Lucky is better than good

Another tolerably successful day for sterling took it an average of 0.2% higher against the other ten most actively-traded currencies. The biggest mover - and loser - was the Canadian dollar, down by 0.5%, and the accidental winner was the Swedish krona, up 0.2%. Sterling was lucky.

In normal circumstances the pound would have taken a good deal of stick after the UK services purchasing managers' index fell a point and a half to 48.9, a point lower than expected and below the breakeven level. Britain's services sector slowed for the first time since July 2016. Optimists might say never mind, look at Monday's unexpectedly strong manufacturing PMI. Pessimists would point out that the services sector accounts for four fifths of gross domestic product, and that Monday's number was inflated by pre-Brexit stockpiling.

But never mind, investors were prepared to overlook the figure and concentrate instead on the luxuriously soft Brexit which they believe is almost within reach. The House of Commons voted last night, by a majority of one, to require the government to ask for a further delay to Brexit rather than leave the EU without an arrangement. It was not just another indicative vote: Subject to the House of Lords' approval this one will become law.

Euro PMIs surprise and delight

With one exception the ecostats from Europe exceeded expectations.  They helped the euro move higher against the US dollar and Japanese yen but they did not take it far. It lost a tenth of a cent to sterling, sharing third place with the antipodean dollars.

Germany's composite PMI spoiled an otherwise perfect flush of better-than-expected data from the euro zone. At 51.4 it narrowly missed the 51.5 forecast. The lowest reading was the 48.9 achieved by France's composite index and even that was better than expected. For good measure, Euroland retail sales also beat forecast, increasing by 0.4% in February.

The US services PMIs were better those from Europe, with Markit at 55.3 and the ISM at 56.1. However, the ISM reading unhelpfully came in nearly two points below forecast. ADP's employment change number was also lower than expected, indicating 129k new jobs.

Jobs and talks

The data to watch out for in the next two days are Friday's jobs numbers from Canada and the States. The talks to keep an eye on are those between prime minister Theresa May and opposition leader Jeremy Corbyn.  

Ahead of London's opening this morning Germany released a set of factory orders data even more dismal than last month's figures. January's 2.6% decline was eclipsed by a 4.2% fall in February. There is not a whole lot more on today's agenda other then Ivey's Canadian PMI. The Canadian and US employment figures come out on Friday afternoon. Analysts are looking for a 180k increase in US nonfarm payrolls and a thousand new Canadian jobs.

With eight days to go before Britain is scheduled to leave the EU the prime minister is hoping that Jeremy Corbyn can either help to find a solution or share the blame. Investors are hoping the two of them will agree to ask the EU for a year-long extension to Article 50, accepting reluctantly that it would mean another 12 months of futile bickering. 

GBP Brexit optimism trumps slowing services

GBP Brexit optimism trumps slowing services

EUR roughly steady against USD, CHF and JPY

EUR roughly steady against USD, CHF and JPY

AUD steady against EUR and NZD

AUD steady against EUR and NZD

JPY Marking time

JPY Marking time

SEK The accidental leader

SEK The accidental leader

CAD Slips on oil prices

CAD Slips on oil prices

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