Brexit Charm Offensive Begins

Markets start the week quietly ahead of the Prime Minister's European tour attempting to negotiate a further Brexit extension.

Previous Day's Market Highlights

The euro was the major mover on Monday, with the single currency having its best day against the dollar since mid-March after an improvement in risk appetite as well as a couple of better than expected data releases. Though the bloc’s economic activity remains soft, data showed a wider than expected German trade surplus along with investor confidence figures reaching their highest level since December 2018. Over the course of the day, the euro gained a shade over 0.4% against the dollar, one of its biggest daily rallies this year. In contrast, the dollar fell across the board, not helped by a 0.5% decline in factory orders in February. Measured against a basket of peers, the dollar fell 0.3%, ending the day close to its lowest levels in a week. 
 
Elsewhere, moves were relatively muted, with the pound holding steady above the $1.30 level amid an absence of economic data or Brexit-related headlines. Commodity currencies did strengthen however, with the Canadian dollar adding almost 0.5% after oil prices rose to fresh 5-month highs. The loonie rallied despite a poor set of economic data which showed the real estate market remaining on shaky ground with both housing starts and building permits falling last month, with the latter declining at 5.7% on a year-on-year basis. 
 
Away from FX, equity markets struck a cautious tone on both sides of the Atlantic. The pan-European Stoxx 600 closed in the red, losing 0.3%, while the US benchmark S&P 500 edged into positive territory, closing up by 0.1%. Finally, oil prices rallied to fresh year-to-date highs as tensions in Libya raised concerns over possible supply disruption. Brent added 0.75% over the day while US benchmark WTI gained over 1%, trading above $64bbl.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1615 1.1803 1.1463 2.88%
GBP/USD 1.3085 1.3381 1.2976 3.03%
EUR/USD 1.1265 1.1448 1.1183 2.31%
GBP/AUD 1.8315 1.8851 1.8271 3.08%
GBP/NZD 1.9380 1.9512 1.8960 2.83%
GBP/CAD 1.7400 1.7795 1.7327 2.63%

Today's Market Highlights

The economic calendar is quiet once again today, with no notable due from either the UK or the eurozone though investors will get some lower-tier US data this afternoon. The likely focus will be JOLTS job opening figures, expected at 7.55mln, close to record highs. Markets will look to the figure as confirmation of the tight labour market in the US, as well as the problem of there not being enough people in the US labour force to fill the available jobs. The other notable release come in the form of the NFIB small business optimism index, a useful sentiment gauge for the US economy, though neither data point is likely to have an outsize market impact. 
 
Elsewhere, Prime Minister May begins a charm offensive today ahead of Wednesday’s EU summit, visiting both Berlin and Paris for meetings with Chancellor Merkel and President Macron. Talks are likely to centre around the duration of any extension to Article 50, the chances of Parliament ratifying the Withdrawal Agreement and the possibility of changes to the Political Declaration on the future UK-EU trading relationship. As is now customary, the pound will remain sensitive to any Brexit-related headlines, though sterling seems relatively well-supported as markets continue to see a ‘no-deal’ exit as unlikely. Meanwhile, in Westminster, the Government will lay a motion this afternoon outlining their plans for a delay until 30th June after Yvette Cooper’s bill passed into law last night. This motion is however amendable, with expectations that MPs will vote on amendments to change the exit date and clarify the purpose of any extension. Amendments to the motion do seem rather futile however, with the EU having the final say over the granting of any delay.
 
Finally, central bank speakers may be of more interest to markets than economic data, though all speakers are after the London market closes. Markets are due to hear from Fed Vice Chair Clarida this evening, before hearing from the RBA’s Debelle and BoJ Governor Kuroda overnight.

Today's Economic Calendar

Time Currency Release Consensus Previous
11:00am USD NFIB Small Business Optimism Index 101.3 101.7
3:00pm USD JOLTS Job Openings 7.55m 7.58m