Daily Brief

Daily Brief

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Plenty of time

Pantomime season

"The opposition is bringing a vote of no confidence against the prime minister."

"Oh no it isn't!"

Theresa May brushed off a half-hearted challenge by Labour party leader Jeremy Corbyn by refusing to give him parliamentary time. Instead, after the Christmas break, she wants to have another go with her EU withdrawal bill.

The revived Brexit debate will take place in a month's time. That, at least, is the theory. However, there are few in Westminster or elsewhere who believe this will all be settled by a single vote in the week of 14 January. They don't know how - or if - it will be settled but their inclination is to look for a soft Brexit, a postponed Brexit or no Brexit at all. Investors' comfortable assumption is that it will not come to no-deal Brexit on World Trade Organisation terms, despite media reports of another £2bn being assigned to contingency planning.

That optimism made for an easy day for sterling on Monday. It was on average a dozen or so ticks higher against the other major currencies, adding two fifths of a US cent, losing two thirds of a yen and holding steady against the euro.

Red is the colour

One of the reasons for sterling's relatively easy ride was that international investors had bigger fish to fry. Profit warnings from the online retail sector, a sub-$50 price for WTI crude and further declines for global equities were broadly positive for the safe-havens and unhelpful to the commodity-producers.

Not for the first time, the path of USD/JPY correlated strongly with the US DJ30 stock index. As US share prices moved lower, so did the dollar against the yen. The yen is 0.4% higher on the day against sterling and the Swiss franc up by half that much. Unusually, both the safe-havens had to give way to the NZ dollar, which received help from an improvement in business confidence.

The biggest losers were the Norwegian krone (down by 0.7%) and Canadian dollar (-0.5%), both of them suffering as a result of lower oil prices. The US dollar and South African rand shared the antepenultimate slot with losses of 0.3%.

Redundant data

Other than the NZ business confidence data, Monday's ecostats failed to grab investors' attention. Today's crop does not promise any greater involvement.

Had it not been for last Thursday's policy announcement by the European Central Bank, investors might have been at least a little bit interested in the below-target 1.9% headline rate for Euroland inflation. Nor did they care that the New York Fed's manufacturing index had crumbled from 23.3 to 10.9 or that the NAHB housing index was down by four points at 56.

On today's list, IFO's measures of German business confidence - the only European statistics - are forecast to be a little softer. America reports on housing starts and building permits and Canada chips in with manufacturing shipments. New Zealand's GDT index of dairy prices is also expected at some point.

 

GBP unmoved by Brexit procrastination

GBP unmoved by Brexit procrastination

JPY higher on safe-haven demand

JPY higher on safe-haven demand

NZD leads following business confidence data

NZD leads following business confidence data

CAD hampered by lower oil prices

CAD hampered by lower oil prices

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