What’s been happening?

Pound Sterling – UK Markets 

The pound sterling stayed relatively calm on Monday in the absence of significant developments and closed the day virtually flat against both the dollar and the shared currency. British Prime Minister Theresa May’s spokesman told reporters that the merits of the indicative votes on Brexit were to be considered by the cabinet on Tuesday but didn’t provide a possible time frame when the Withdrawal Bill will be presented to the House of Commons. “PM May already has an agreement with the EU to work hard to make sure there will be alternative arrangements by December 2020 to avoid a backstop,” the spokesman added.

Meanwhile, British Foreign Secretary Jeremy Hunt argued that although a no-deal Brexit be immensely disruptive economically, it was necessary to have all the options on the table during the negotiation. When asked whether he would run for the Conservative Party leadership, Hunt declined to answer and said that their focus was to “get on and deliver Brexit.”

US Dollar – US Markets

The US Dollar Index, which tracks the dollar’s value against a basket of six major currencies, spent the day moving sideways on Monday. The only data from the U.S. showed that the economy expanded at a slow pace in April with the Chicago Fed’s National Activity Index dropping to -0.45 from 0.05 in March. “Thirty-seven indicators improved from March to April, while 48 indicators deteriorated. Of the indicators that improved, 14 made negative contributions,” the Chicago Fed said in the press release.

While speaking at an event organized by the Federal Reserve Bank of New York, the FOMC’s Vice Chair, Richard Clarida, said that it made sense for the Fed to remain open-minded and consider ideas that could potentially enhance the bank’s ability to deliver on the dual mandate. Furthermore, New York Fed President Williams repeated that policymakers wanted to maintain a strong labour market while keeping the inflation low. 

Regarding the U.S.-China trade conflict, Chinese news outlet Global Times reported that China’s Foreign Ministry said Donald Trump's claim that China broke the trade deal was an attempt to muddy the waters and shift blame. “It was the US' maximum pressure that led to there being no deal in the latest trade talks,” the ministry explained. 

Euro – European Markets

The Eurostat on Monday reported that the current account surplus in March rose to €35 billion from €16.7 billion. Additionally, in its monthly report, Germany’s Bundesbank reiterated that the Germany economy was still weak despite the recent pickup in activity. Nevertheless, the shared currency didn’t show a meaningful reaction amid the choppy market action.

While speaking at a conference in London, European Central Bank policymaker and Governor of the Bank of Spain Pablo Hernandez de Cos stated that the European financial system was still fragile and fragmented due to the "doom-loop" between sovereigns and banks. “Europe needs to address current deadlock on the third pillar of banking union, European deposit insurance scheme,” de Cos added.

What’s coming up? 

UK: The Confederation of British Industry will publish the Industrial Trends Survey on Tuesday.

US:  The only data featured in the U.S. economic docket will be the existing home sales. Boston Fed President Rosengren and Chicago Fed President Evans will be delivering speeches.

EU: The European Commission will release its Consumer Confidence report on Tuesday.