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Referendum spectre appears

Referendum spectre appears

A lack of progress in solving the Brexit impasse ahead of the emergency EU Summit meeting next week left the markets uneasy, despite Wednesday’s vote reducing the perceived chances of a “no-deal”. The government continued discussions with the Labour Party and no breakthrough appeared it was also reported that a “confirmatory referendum” was under consideration. Party tensions remained extremely high.

Sterling was hampered by modestly weaker oil prices and saw lows around 1.3060 against the Dollar and near 1.1630 on the Euro. Reports surfaced that EU Council President Donald Tusk could propose a 12-month, flexible, Article 50 extension. Naturally, there are concerns (aka despair) that a long extension would prolong economic uncertainty, delaying investment, any easing of the immediate crisis phase would potentially be Pound positive. Sterling recovered to gain 50c against the Dollar and 50c on the Euro. Beware of more choppy trading today.


There are signs of green shoots of optimism over a trade deal between Beijing and Washington. Equity markets are broadly higher too with the Dollar trading within a narrow range.

US initial jobless claims declined to 202,000 in the latest week from 212,000 previously and the lowest reading for over two-months which continued to suggest a strong labour market.  The Challenger survey recorded a decline in March job cuts. This is the lowest reading since 1969, which again sends signals of a strong labour market before the release of key Non-Farm Payrolls data today.

The market is acting with caution ahead of today’s employment report given the potential for significant volatility after last month’s very weak increase in nonfarm payrolls.


The European Central Bank’s (ECB) latest minutes did not provide any shocks but seemed to solidify feelings that economic growth will be hard to come by in the region going forward. Some Members are also in favour of extending guidance for zero interest rates until at least the first quarter of 2020. This meant that Thursday was a fairly tough day for the Euro and versus the Dollar it settled around the 1.1225 mark. German factory orders also put the brakes on any growth, coming in well below consensus (4.2% month-on-month and 8.4% year-on-year decline) which had a knock-on effect for commodity currencies.

Today sees German industrial production, French current account and trade balance numbers and house prices out of the UK. The data today, however, should not cause too much volatility for the single currency but there is a Eurogroup meeting happening and any news over Brexit will be closely watched. Today also sees US nonfarm payroll figures which usually provides some movement.


Data to watch:

24H EUR Eurogroup Meeting
05:00 JPY Leading Economic Index (Feb)
06:00 EUR Industrial Production s.a. (MoM) (Feb) (Germany)
12:30 USD Nonfarm Payrolls (Mar)
12:30 USD Average Hourly Earnings (YoY) (Mar)
12:30 USD Unemployment Rate (Mar)
12:30 USD Labor Force Participation Rate (Mar)
12:30 USD Average Hourly Earnings (MoM) (Mar)
12:30 CAD Participation Rate (Mar)
12:30 CAD Net Change in Employment (Mar)
12:30 CAD Average Hourly Wages (YoY) (Mar)
12:30 CAD Unemployment Rate (Mar)

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