Daily Brief

Daily Brief

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Sales and votes

Deal not No Deal, please

Financial markets seem unusually relaxed on both counts. There was a pick-up in oil prices on Friday but WTI crude is still 6.4% lower than at the beginning of last week. Sterling is up by 0.5% against the other major currencies, on average, from its position on Thursday morning. In fact, on Thursday the pound put in its best daily performance since the end of June adding, inter alia, one US cent and two thirds of a euro cent.

That achievement was partly a reaction to the beating sterling had taken in the early part of the week. Surprisingly strong UK retail sales data also had something to do with it. The main factor, though, was a vote in the House of Commons. Parliament approved an amendment that will make it more difficult for the new Prime Minister to prevent it sitting. Separately, and less helpfully, the politically-neutral Office for Budget Responsibility published an assessment of how even a benign no-deal Brexit would throw the UK economy into recession.

It's guidance Jim, but not as we know it

There was a to-do on Thursday when John Williams, the president of the New York Fed, said "It's better to take preventative measures than to wait for disaster to unfold". Investors took it as notice of a 50-basis-point cut this month.  

There was more excitement shortly afterwards when the Fed issued a "clarification" that Mr Williams had been talking about the result of 20 years' research and not about next week's rate decision. Having jumped higher on the original comment and fallen back on the clarification, the dollar was back to its starting point by Friday afternoon.

The best guess at the moment is that the Federal Open Market Committee will lop 25 basis points off the Funds rate next Wednesday. Even so, a half-point cut cannot be ruled out and the US president made clear his preference on Friday.

Number 10 and ECB

The big items on this week's programme are the announcements of a new Prime Minister on Wednesday and European Central Bank monetary policy the following day. In the meantime, today's agenda is brief and tomorrow's is not much longer.

Last Thursday, the Canadian dollar got a lift from ADP's report that Canadian payrolls increased by 30.4k in June. On Friday it was knocked back by an unexpected decline in retail sales. Friday's UK public sector net borrowing figure was twice as big as forecast.

There are three ecostats on today's agenda: The CBI's Industrial Trends Survey, the Chicago Fed's National Activity Index and Canadian wholesale sales. Bank of Japan governor Haruhiko Kuroda will be speaking this afternoon.

Parliament attempts to prevent its own suspension

Parliament attempts to prevent its own suspension

USD: Confused by Fed guidance

USD: Confused by Fed guidance

CAD: Jobs good, sales bad

CAD: Jobs good, sales bad

EUR: Low profile and flat

EUR: Low profile and flat

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