Brexit vote hogs the headlines


Investors found it difficult to get worked up about the dollar. There was no breakthrough in trade negotiations with China although the emergence - if not the publication - of the much-heralded Mueller report held out some hope that the president can now direct more of his attention to that topic. Philadelphia Fed president Patrick Harker displayed some, but not all, of the patience urged by his boss. He believes that "at most, one rate hike this year, and one in 2020, is appropriate".

There were two US economic statistics for investors to ponder, neither of them hugely important. The Chicago Fed's national activity index shaded from 0.29 to 0.25 and the Dallas Fed's manufacturing index was five points lower at 8.3.


Investors were no more exercised by the euro than they were about the USD. The two were unchanged against one another, having covered a range of little more than a quarter of a cent.

There were two ecostats from France this morning and one from Germany. The 0.3% expansion of France's economy in the fourth quarter was very much a lagging indicator. The slight improvement in the French business climate and the equally slight setback for German consumer confidence were of no consequence to the EUR. 


Investors did not take much interest in the Canadian dollar either. As they reassessed the global economic situation they were inclined to tone down their nervousness, which was positive for commodity-oriented currencies including the CAD. Other than that, all investors had to guide them was oil prices.  

The Loonie followed WTI crude quite closely: WTI went up by 1.1% and the CAD strengthened by 0.2% against the USD.


Sterling went up by 0.2% too, though its progress was more erratic. There were half a dozen changes of direction as investors rethought, and rethought again, the possible Brexit scenarios. Those were as numerous as they were before; leave the EU with an agreement, leave without an agreement, hold another referendum or yank the Article 50 resignation letter.

The House of Commons debated amendments to a "neutral" bill, one of which would set aside time for indicative votes on the possible outcomes, the other requiring parliamentary approval of there were to be a do-deal Brexit. The second of those missed out by 311 - 314 votes: the former went through with a comfortable 329 - 302 majority. So tomorrow the house will discuss the possible options in the hope of finding something that can command a majority.  


For whatever reason, investors became less anxious about the global economy over the weekend. Where on Friday the safe-haven JPY had led the way with the higher-risk ZAR at the back of the field, on Monday they swapped places and the yen was sent to the bottom of the class.

There were no Japanese data to affect the JPY. It is 0.2% lower against the USD.

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