Quelle Surprise by Powell and Co
Another dovish turn by the Federal Reserve last night sent the dollar plummeting across the board with the broad DXY index falling 0.66%. The revised forward guidance measure showed 11 out of 17 Fed officials are not planning on raising rates at all in 2019, down from the market’s assumption of one 25 basis point hike this year.
Euro prospects capped by softer wage growth
EUR held the lines yesterday despite a softer Q4 wage growth figure, that may limit the prospects of strengthening consumer spending and rising core inflation.
EM Currencies Rally in Muted G10 Market
Emerging Markets rallied against the US dollar as a whole yesterday as markets anticipate further dovish tones from the Federal Reserve on Wednesday.
Brexit may be wrapped up this week, but it looks unlikely
Sterling gears up for yet another pivotal Brexit week. The next 5 days determine whether we leave the EU with a deal in place in the next month or whether a longer delay to Article 50 will be imposed.
Third Time Lucky For May
If a deal is pushed through next week in a third meaningful vote, May will request a short extension to A50 such that the legal framework of her deal can be finalised. This would undoubtedly be the best case for sterling now as it awaits the signal to push back towards fair value.
Fresh highs for Sterling as no-deal “ruled out”
The path of least resistance for sterling today continues to be higher as the chances of May’s deal passing or an extension increases, although caution is warranted, as there may be further twists in the tale.
Back to square one for May
Back to square one for both the pound and Brexit negotiations. Parliament today sees a vote on whether the UK exits the EU with no-deal in place or not on March 29th at 19:00 GMT. Prior to this vote, Philip Hammond, the Chancellor of the Exchequer, will give the UK’s Spring Statement at 12:30 GMT but has denied that this will be a fiscal event.
Deadline day for May
Investors will be weighing up the likelihood of a deal being struck as Parliament battles in the House of Commons and Brexit noise increases. The pound is likely to be highly volatile today as the Brexit headlines come thick and fast prior to tonight’s vote at around 19:30 GMT.
Finally, some progress on Brexit?
Now don’t hold your breath, but there is a slim possibility Brexit could be wrapped up in the next few days. But who are we kidding? Not the market it seems, which remains adamant that this week’s indicative votes will lead to a minor extension of roughly 2 months in Article 50.
When doves cry – a Mario Draghi story
The euro has managed to drag itself slightly higher from yesterday’s lows, but equity markets were not significantly buoyed by the TLTRO news, possibly due to the limited macro impact of the measures compared to the ECB’s asset purchase program.
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.