What’s been happening?

Pound Sterling – UK Markets 

The pound sterling started the new week on a positive note and recorded gains against the dollar while rising modestly vs the euro. Following his meeting with ırish Prime Minister Leo Varadkar, the European Union’s chief Brexit negotiator, Michel Barnier, said that the EY would “stand fully behind Ireland” regardless of what happens next with regards to Brexit. Barnier further stated that they would be “happy” to offer the UK a customs union and added that he hoped the talks between opposition leader Corbyn and Prime Minister May end positively ahead of this Wednesday’s critical summit. 

Later in the day, Corbyn told reporters that the government was not willing to move its red lines. “So far we have not had the undertakings we want on our demands; there are many concerns we have with the political declaration which we will put to government in talks tomorrow,” Corbyn said. On other political developments, the UK’s House of Lords approved the legislation seeking to force the PM to delay Brexit with an aim to avoid a no-deal scenario on April 12.

US Dollar – US Markets

The only macroeconomic data published from the United States on Monday showed that new orders for manufactured goods in February declined by 0.5% to $497.5 billion. “New orders for manufactured durable goods in February, down following three consecutive monthly increases, decreased $4.2 billion or 1.6 percent to $250.5 billion, unchanged from the previously published decrease,” the U.S. Census Bureau’s publication revealed. Although this reading came in slightly better than the market expectation of -0.6%, the greenback failed to preserve its strength and the US Dollar Index, which gauges the dollar’s value against a basket of six major currencies, lost around 0.3% on the daily basis.

Meanwhile, commenting on the trade negotiations with the EU during his speech at the U.S. Chamber of Commerce, White House advisor and trade delegation member Clete Willem said that the Trump administration was pleased with the progress made on soybean in discussions with the EU. Willems also noted that the U.S. and the EU were “working hand in hand” on China’s “non-market economic policies.”

Euro – European Markets

The shared currency took advantage of the upbeat data on Monday and gathered strength against both the pound sterling and the dollar ahead of this Wednesday’s important ECB meeting. Destatis on Monday reported that trade surplus in Germany edged higher to €18.7 billion in February to better analysts’ estimate of €17 billion. 

Additionally, Sentix Investor Confidence in the euro area improved to its best level since November 2018 at -0.3 in April from -2.2 and beat experts’ forecast of -2.1. “Economic observers are currently focusing their attention strongly on China. The signs in China are increasingly pointing to an upswing. Should there be an additional settlement in the trade dispute with the USA, the second economically robust region of the world economy, the European economy could also see a turnaround. To date, only further stabilization can be reported,” Sentix elaborated.

What’s coming up? 

UK: There won’t be any macroeconomic data releases from the UK on Tuesday and political headlines ahead of Wednesday’s critical summit are likely to continue to impact British pound’s market valuation.

US: NFIBB Economic Optimism Index, JOLTS job openings, and IBD/TIPP Economic Optimism Index will be featured in the U.S. economic docket.

EU: Retail sales from Italy and the unemployment rate from Switzerland will be released on Tuesday but are unlikely to receive a significant market reaction.