Brexit Brexit, burning bright


Federal Reserve vice chairman Richard Clarida was in a buoyant mood when he addressed a group of business leaders and central bankers in Dallas yesterday. He did not mention "patience", preferring instead to describe upward pressure on inflation as "muted". Mr Clarida did however wheel out another gem from the Fed's current phrasebook, saying "the US economy is in a good place right now".

The message on trade was, to say the least, mixed. Trump spoke of a "signing summit" with China's president Xi even as there was talk of him opening up a new front in the trade war, this time with Europe. Nothing is likely in that direction in the immediate future, because the president is meeting with Kim Jong Un in Hanoi. However, on the long trip home there might be more from him on the subject.  


Another day below the radar left the EUR 0.2% higher, almost by accident. Four changes of direction took the currency across a range of little more than quarter of a US cent.

It starts today towards the top of that range, following an unchanged Gfk consumer confidence reading from Germany - 10.8 - and a slight improvement in French consumer confidence from 92 to 95. Those confidence measures have little to do with the upbeat EUR: its more important support comes from optimism that Britain is looking less likely to upset the European applecart with a messy Brexit.


Lower oil means a lower Loonie. Investors' twitterwatch desks were quick to spot a message from the president in which he opined: "Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike - fragile!" Armed with that intel, traders promptly knocked a dollar and a half off WTI crude. It is 3.3% lower on the day.

The CAD followed the move slavishly. It, too, fell off a cliff at 7am ET and is 0.6% lower on the day against the USD.


For sterling it was yet again all about Brexit, and the likelihood of Britain avoiding a no-deal departure from the EU. The mood was taken further in that direction on Monday when Jeremy Corbyn, the leader of the opposition Labour party, reluctantly announced that he would support a second referendum if his own Brexit proposal is rejected by parliament. It was taken further still this morning by rumours that the prime minister will rule out a no-deal Brexit and extend the B-Day timetable beyond March 29. The GBP is 0.8% higher on the day and the top performer among the majors.

Where it goes next will depend on what the prime minister has to say when she addresses parliament at 7.30am ET. Investors are expecting her to nix the no-deal scenario and acknowledge that a delay will be necessary. Should she fail to deliver, sterling will stall, at least temporarily.


The closer investors watch the JPY, the more it goes nowhere. It is 0.1% lower on the day against the dollar and 0.1% below its level a week ago.  

There were no Japanese data overnight. None are scheduled for tonight either.

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