Final days of the United Kingdom?
Welcome to Monday and is this the week that sees Scotland flee the nest and become independent? More rhetoric is constantly coming out from both sides and opinion polls are indicating an extremely tight-run race and with hundreds of thousands of voters still supposedly undecided, it really is too close to call.
There is a good amount of data out of the UK this week but while the markets may be volatile it would not be unreasonable to expect traders to remain slightly cautious until we know which way Scotland will turn. If Scotland says “yes”, expect Sterling to suffer and if Scotland says “no” expect a fairly impressive rally by the pound. Mark Carney, a man who has previous experience of referenda, whilst in Canada, has practically cleared his diary to deal with the “what ifs”. It will fall upon him to address any financial stability issues during what would be an 18 month transition.
Elsewhere, the Australian Dollar is under pressure following further poor results out of China which have raised fears over a re-emerging economic slowdown and boosted chances of continuing record low interest rates.
The US is chugging along nicely with retails sales figures coming in as expected and a rate hike being seen as moving closer.
In Europe, Mario Draghi is still feeling the pressure as he attempts to give the Eurozone a bit of a jump-start. His plans are still reliant on structural reforms as well so we will have to wait and see what impact they have.
It’s a relatively quiet day today with no major news out other than trade balance from Europe and industrial production out of the US.