Dollar slumps as Trump’s speech does not signal swift end of US government shutdown
Soggy sentiment surrounded sterling yesterday as no progress appears to be made in the process of getting any Brexit deal through Parliament, as the ‘meaningful vote’ of next week draws ever more near. Despite that, this morning the Great British Pound has risen itself onto a stronger footing, after 20 Tories disobeyed the party’s whip and voted along with a Labour proposal that limits the powers of the Exchequer to cut or raise taxes in case of a ‘no deal’ Brexit scenario.
Smashing US job report and dovish Powell strap greenback in rollercoaster
Sterling spent most of the day Friday on the offensive after a positive headline on the Services Purchasing Manager Index for December at 51.2 set a positive mood. Unfortunately for sterling the entire picture is less upbeat, with the composite of the Services, Manufacturing and Construction PMI pointing towards a growth of merely 0.1% in December.
Trade wars may not be so easy to win after all – and that’s a good thing.
After taking a good old fashioned nose dive early morning during the Asian session yesterday, sterling not only pared its losses, but even managed to close above its opening level eventually. The Construction Purchasing Manager Index will be one of the last in line to claim credit for this as it came in virtually bang in line with expectations at a score of 52.8. A bounce back from the fall on Wednesday seems a more likely explanation, as there seemed to be no direct catalyst for this drop except for the Meaningful vote deadline drawing nearer with still no agreement in Parliament yet in sight. Today at 9:30 GMT arguably the UK’s most important data release for the week is scheduled with the Services PMI.
JPY jump sends warning shot to markets for 2019
Sterling has experienced one of the worst starts to year in years yesterday with losses across the board, which apart from paring against the dollar, are worsening against other currencies this morning. A pretty solid beat on the Manufacturing Purchasing Manager Index with a score of 54.2 was to no avail for GBP, as Brexit deadlines drawing closer appear to dominate sentiment. The meaningful vote in the week of the 14th of January approaches apace and we do not appear even an inch closer to getting a Brexit deal before the March 29st deadline.
Government shutdown keeps USD pinned
The Canadian dollar had a relatively calm end to the year on Monday, though it was the worst performing G10 currency against the US dollar last quarter. Worsening risk appetite and plummeting crude oil prices were to blame, while domestic conditions in Canada seem reasonably strong for now and the Bank of Canada remains on a data-dependent hiking cycle.
Sterling enjoys absence of politicians and Monex Europe wishes you a splendid 2019
Politicians can take holidays more often, that is at least according to the pound sterling which was among the top gainers on Friday and continues to advance this morning as silence sovereignly reigns over Westminster. The only thing bubbling today will be the champagne tonight as little data comes out today for the UK. More fireworks can be expected later in the week with the Manufacturing, Construction and Services Purchasing Manager Indices coming out on Wednesday, Thursday and Friday respectively.
Dollar drops to one-week low amid US shutdown
Over the festive period, it has all but ground to a halt for sterling with a big Brexit sized elephant still in the room. With little filling the data calendar up until the new year, all eyes will be firmly fixated on Brexit headlines that will likely resume in the new year. Parliament doesn’t reconvene until the 7th of January, but markets will await political headlines before then.
Positive post-Christmas sentiment turns US markets green.
USD sat comfortably in the green zone yesterday on the back of a surge in stock markets. With the S&P and the Dow Jones indexes rallying by 5% and the Nasdaq having its largest one-day increase since 2009, Wall Street seems to be enjoying some belated Christmas cheer.
Fed lowers dots and props up G10 gains this morning.
Before the Federal Open Market Committee meeting yesterday, expectations on the viewpoints of the Fed were diverse, a situation that surprisingly hasn’t changed much after the meeting as markets are still trying to make up whether they saw a relatively hawkish, or a relatively dovish FOMC yesterday. Markets were positioned for a very dovish Fed, but as the Rate Statement was more upbeat than expected, USD rallied, although it came under pressure again this morning. Both the inflation and growth forecasts for 2018 and 2019 were adjusted downwards, while a shift in the dot plot now suggests the median voter will vote for only two rate hikes in 2019 instead of three.
Another day, another threat for May
Jeremy Corbyn tabled a vote of no confidence in Theresa May, which was seen as a mere formality, and wasn’t given the time of day by the governing party as they claimed they had no time for “political games”. By batting the ball back into Labour’s court, May is forcing Corbyn to either simmer down and wait for the meaningful vote in mid-January or table a formal vote of no confidence in the government – the latter would see a snap election take place if it is supported by 2/3rds of MP’s.
Ranko BerichRanko Berich is Head of Market Analysis at Monex Europe & Monex Canada. He is a respected macroeconomic commentator, combining incisive market insight with a deep understanding of global economic and political events.
Ranko leads our team of analysts, providing commentary and insight on the markets as news breaks.