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Daily brief

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Winter is coming

Is it a wall? Is it a cliff?

President Joko Widodo, the host of the IMF gathering in Bali, quoted Nedd Stark as he warned of the risks facing the global economy. He was referring principally to Trump's trade war and the breakdown of old alliances but he could also have had his eye on Germany's coalition, Italy's deficit financing and, of course, Brexit.  

On this side of the Channel the most immediate concern was that Britain is no closer to a Brexit deal with the EU than it was last time an agreement was just around the corner. Worse, factional disagreements within the cabinet were gaining greater media coverage at the end of last week. The realisation that there could, after all, be a no-deal Brexit banished the complacency investors had felt earlier in the week.

During most of Friday sterling was on the retreat and it took another whack in the Far East this morning after it came out that Brexit Secretary Raab's weekend trip to Brussels had achieved nothing. Compared with Friday morning's levels the pound is lower on every front, down by an average of 0.9%. Its losses include half a euro cent and one and a quarter US cents.

Euro damned with faint praise

The euro had a better day than sterling  but it did not exactly cover itself with glory. The common currency was in penultimate position among the majors with an average loss of 0.4%. Its problems at the end of last week centred on Italy's debt: this morning they related to an election upset in Germany.  

At the weekend the European Central Bank president weighed into the spat about Italy. He called upon Rome's leaders to tone down their anti-EU rhetoric, especially the bit about pulling out of the single currency and reinstating the lira

Chancellor Angela Merkel's close companion party, the Bavarian CSU, took a drubbing in the elections for the state parliament. Having won 47% of the votes four years ago it took just 37% yesterday. There will be no immediate impact on Frau Merkel's coalition but the negative implications are clear.

Other stuff to worry about

The continued absence of Jamal Khashoggi, a journalist who was last seen entering the Saudi consulate in Istanbul, could provoke a new international spat just as another one is put to rest. At the weekend Turkey released an American priest whose imprisonment had strained relations between Ankara and Washington.

There are at least two ways the Saudi situation could go wrong. Both of them would probably mean higher oil prices. However, the opening shots have been fired by Trump, who threatened "very very powerful" things and by the Saudi regime who promised to "respond with greater action". 

Down among any other business, the ecostats that will matter today and overnight come from the United States, New Zealand and China. The US numbers relate to September's retail sales while the figures from China and NZ cover inflation.

GBP gaps lower after Raab retreat

GBP gaps lower after Raab retreat

EUR haunted by Salvini and Merkel

EUR haunted by Salvini and Merkel

USD awaits retail sales data

USD awaits retail sales data

NZD inflation out tonight

NZD inflation out tonight

CNY inflation out tonight

CNY inflation out tonight

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