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Will she, won't she?

Aggro all round

The mischief was spread fairly evenly at the end of last week. The United States had disappointing employment numbers. Canada had a row with China over Huawei. Euroland had riots in Paris. Switzerland had a traffic jam on a minor road near Brienz.  And Britain had Brexit.

The real surprise came on Thursday, when sterling somehow became the top performer among the major currencies with an average gain of 0.5%.  The next, though lesser, surprise was on Friday when the pound was down by an average of 0.3% despite nothing fundamental having changed.  Compared with Thursday morning sterling is half a cent lower against the euro and two fifths of a cent up against the US dollar, with an average net gain of 0.1%.

Investors are banking on the idea that, whatever the result of tomorrow's Commons vote, there will eventually be a deal between Britain and the EU.  Of course, any optimism on that score is tempered with concern about how long it might take to get there, and that was sterling's problem on Friday.

Trade wars are good

Whilst there is no obvious connection between trade wars, jobs, equity prices and even the balance of trade, the latter three were all disappointing from the US dollar's point of view.  Nonfarm payrolls fell short of forecast, the Dow was down by 1.7% and America logged a record trade deficit with China in November.

US payrolls went up by 155k in November instead of the predicted 200k and October's increase was revised lower. Together the effect was to leave total employment 57k fewer than expected. The numbers did nothing to reassure investors who fear that the effect of Trump's tax and spend stimulus might be running out of steam.  

The unexpected winner on Friday was the Canadian dollar, which felt no pain whatsoever from the supposedly risk-off mood. Its good fortune came in the form of a thumping 94k increase in jobs as unemployment fell to a record low of 5.6%. The Loonie strengthened by nearly a cent on the news and it is a cent and a third higher on the day.

Vote countdown

The Sunday Times said "PM will delay Commons vote on EU withdrawal".  On TV Brexit secretary Stephen Barclay said "the vote is going ahead".  Uncertainty piled upon uncertainty. The early signs this morning were that sterling was taking it well but between now and tomorrow's vote a lot of water must pass under the bridge.

Whilst there can be no suggestion that UK economic data for October carry anywhere near the weight of Parliament's pending decision, the pound will have to contend this morning with the figures for manufacturing and industrial production, the balance of trade and gross domestic product.  Bank of England deputy governor Jon Cunliffe will also be speaking this morning.

There is not much to come from Europe or North America. Sentix releases its index of Euroland investor confidence and Canada reports on housing starts and building permits.

GBP holds its own after leading on Thursday

GBP holds its own after leading on Thursday

CAD Friday's top performer after record employment numbers

CAD Friday's top performer after record employment numbers

USD steady despite disappointing jobs and trade data

USD steady despite disappointing jobs and trade data

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