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Supreme Courts, Central Banks and Prime Ministers

Supreme Courts, Central Banks and Prime Ministers


Weaker global risk appetite clipped the Pound’s wings yesterday but soaring oil prices provided some support. Boris Johnson stated the meeting with the EU’s Jean-Claude Juncker was constructive and that there would be no extension sought, whereas Juncker himself stated that the UK hadn’t made any workable backstop proposals. The absence of a breakthrough prevented Sterling from gaining any further lift, especially after an awkward press conference in Luxembourg that featured an empty podium and strong criticism. 

The Pound also suffered a technical correction after strong gains last Friday, retreating close to 1.2400 against a firm Dollar before recovering and the Euro defended the 1.1300 mark. Central bank meetings this week have triggered an air of caution and the Supreme Court will begin hearing the case against parliamentary prorogation today; potentially making a ruling by Thursday. 



The New York Empire manufacturing index declined to 2 for September from 4.8 previously and below consensus forecasts of 4.0. There was a slowdown in new orders growth but prices increased at a faster pace alongside significant employment growth. Companies were less confident in the outlook and the overall market impact was limited given the absence of a clear-cut message in the data with trading also restrained ahead of Wednesday’s Fed rate decision. There was further tightness in the US repo market with upward pressure on overnight rates which also provided an element of Dollar support during the day. 



ECB council member Phillip Lane stated that incoming information indicated a more extended downturn in Eurozone growth expectations. Predominantly due to external developments, while convergence towards the inflation target has slowed and partially reversed alongside no further hawkish rhetoric from any ECB officials. 

The Euro was unable to make any headway in yesterday’s trading session and gradually drifted lower as German yields declined once again. A retreat below 1.1050 triggering further selling with the Euro losing ground against most, if not all its counterparts. As or writing the common currency finds itself this morning, against the Dollar at 1.1010. 


Data to watch

10.00 EUR – German ZEW Economic Sentiment 

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