A Quiet Day Ahead Leaves Brexit and the Pound in FocusA lighter economic calendar could leave the majors more sensitive to what is scheduled for release. The markets will also need to monitor Brexit chatter.
Earlier in the Day:
Following a busy start to the week, there were no material stats released through the Asian session to provide direction this morning.
While there were no numbers for the markets to consider, economic data out of the U.S on Wednesday reined back the bulls to a certain extent.
It’s all about the U.S – China trade negotiations now. While there’s been plenty of progress, the markets will be looking for the U.S to begin removing the existing tariffs, or at least start talking about it.
For the Majors,
At the time of writing, the Aussie Dollar was up 0.04% to $0.7116, with the Kiwi Dollar up 0.10% to $0.6785 for the session. With the mixed Asian session and U.S futures pointing to a shaky open, the Japanese Yen was up by 0.07% to ¥111.41 against the U.S Dollar. Some reversals following the recent trends can be expected should the markets have little to go on in the day ahead.
In the equity markets, the Nikkei managed a 0.03% gain, while the ASX200 ended the day with a 0.83% loss. At the time of writing, the CSI300 was up 0.79%, while the Hang Seng was down by 0.36%, with some profit-taking contributing to the pullback from levels last hit back in June of last year.
The Day Ahead:
For the EUR
It’s a quieter day ahead on the economic data front, though we can expect the EUR to be on the move through the day. February factory order numbers are due out of Germany in the early part of the day. While forecasts are for a 0.3% rise, it’s going to need to be far better than that to reverse the recent downward trend. Factor orders have fallen for 3 consecutive months and November’s 1% decline was the best of the bunch.
If Germany’s manufacturing PMI numbers are anything to go by, a 0.3% rise may be on the optimistic side. According to the February PMI survey, the downward trend in new orders accelerated, largely driven by a slide in export sales. New business from abroad fell the most since Oct-2012. Moving to the March PMI survey, new orders saw their largest fall since Apr-2009.
Outside of the numbers, the ECB monetary policy meeting minutes from 7th March are also scheduled for release. Following a particularly dovish press conference and some dovish chatter thereafter, the minutes could further discuss the ECB’s willingness to ease further.
While economic data out of China and hopes of a U.S – China trade agreement may have eased the market angst, the reality remains that the Eurozone economy is struggling.
Service sector PMI numbers released on Wednesday may have been on the more positive side, but the bread and butter manufacturing numbers have not been…
Ahead of the numbers and the minutes, market risk sentiment will continue to influence. The latest MP vote preventing a no-deal Brexit was also a positive for the EUR in the early hours.
At the time of writing, the EUR was up 0.11% at $1.1245.
For the Pound
It’s a particularly quiet day on the economic calendar. With no material stats scheduled for release through the day, the focus will remain on Brexit.
Wednesday was another big day in Parliament, with the key vote being the passing of the Cooper Bill. Labour MP Yvette Cooper’s bill forces Theresa May to request for a long extension to Brexit day in the event that there is no deal by 12th April. The House of Lords will need to approve the bill possibly later today. The bigger hurdle could be EU member state support, however.
It wasn’t a resounding victory, with the bill getting through by just 1 vote. What’s next remains to be seen. Theresa May and Opposition Party leader Corbyn will continue their discussions to find a compromise.
Expect the Pound to continue to bounce around as the news wires deliver updates through the day. Of interest will be whether the House of Lords is willing to favor the bill later today. The speed with which the bill passed through Parliament and the 1 vote majority will test the House.
At the time of writing, the Pound was up 0.14% to $1.3177.
Across the Pond
It’s a quiet day ahead on the economic calendar. The weekly jobless claims figures are the only key stats due out of the U.S.
After the week ADP figures on Wednesday, we can expect a degree of sensitivity to today’s numbers.
Any moves will likely be short-lived, however, with a combination of drivers likely to be in play through the day. Positive sentiment towards U.S trade negotiations and updates on Brexit will likely be the main considerations.
Risk on and expect the Dollar to ease further back. We’ve yet to see any data out of the U.S to support a resumption of rate hikes by the FED.
At the time of writing, the Dollar Spot Index was down by 0.02% to 97.07.
For the Loonie
Following a quiet first half of the week, the Ivey PMI is due out later today. The numbers will have to be impressive for the Loonie to hold onto any gains from the stats. Economic data out of Canada continues to be on the softer side, supporting the BoC’s dovish stance on policy.
Outside of the numbers, crude oil prices will continue to influence. The latest EIA figures didn’t do any favors on Wednesday. A sizeable buildup pinned the Loonie back in spite of the risk on sentiment through the day.
The Loonie was down 0.04% at C$1.3353, against the U.S Dollar, at the time of writing.