Wednesday deadline for Plan C
The Pound rose last Friday afternoon on speculation that the Ulster Unionists were moving closer to supporting the Withdrawal Deal. The government reiterated that the Article 50 extension would be lengthy if the deal was not passed, increasing pressure on Conservative MPs to vote for the deal. The Pound closed near 1.3280 against the Dollar and the Euro prevented Sterling from pushing above 1.1750.
Friday’s CFTC data revealed a net short speculative Sterling position remains. These bets against the Pound will need to be reversed in a hurry if the political deadlock is broken, exaggerating a Sterling bounce. Domestic Brexit talks continued over the weekend and there was evidence that some MPs were now ready to back the Withdrawal Deal, but not enough to secure a victory. Chancellor Philip Hammond stated that the vote may not go ahead unless the government is confident of victory and some are openly calling for May’s resignation in return for votes.
The British Chambers of Commerce warned that investment was set to decline at the fastest rate for 10 years. The Pound opens just below 1.3300 on the Dollar and 1.1710 on the Euro. Tomorrow will see UK Jobs & earnings data, Theresa’s deal aka Plan C will need to be voted on by Wednesday and Thursday morning sees the Bank of England’s (BoE) rate decision.
The New York Empire manufacturing index declined to 3.7 for March from 8.8 previously and below consensus forecasts of 10.0. New orders growth also slowed and there was a slower rate of increase in prices received despite upward pressure on input prices. Industrial production data was weaker than expected with the February increase held at 0.1% compared with forecasts of a 0.4% gain and manufacturing output declined for the second successive month.
There was an upward revision to the University of Michigan consumer confidence data while JOLTS job-openings data remained very strong, maintaining expectations of firm domestic demand, although this did refer to January. Disappointing industrial data tended to weaken the Dollar. US currency support was also eroded by an element of optimism that the global economy was starting to stabilise which supported commodity currencies. There were strong expectations that the Federal Reserve (Fed) would reiterate its patient stance with a dovish tone at this week’s meeting.
Friday saw the single currency advance slightly against the Dollar on the release of data from the European Union. The inflation figures were up by 0.3% month-on-month and 1.5% year-on-year, but this was in line with inflation and the pair settled around the 1.1330 mark. As ever, there are persisting concerns over the Eurozone’s growth which is naturally curbing any real progress in the single currency.
Data being released today is fairly light, starting off with the UK’s house price index. This is followed by trade balance numbers out of the EU and then finally the German Buba monthly report is due at 11:00. Having said this, none of these releases are expected to cause any significant volatility.
Data to watch:
04:30 JPY Industrial Production (YoY) (Jan)
20:00 NZD Westpac Consumer Survey (Q1)
22:00 AUD RBA’s Kent speech