Brexit Bill Set for Final Vote in the House of Commons
Focus is on the outcome of the Article 50 bill that’s set to be put for voting in the House of Commons today. Members will hold a final debate on the set of amendments, including key principles of the Brexit negotiation process. Separately, Scotland’s parliament has overwhelmingly rejected the UK government’s plan to leave the European Union, with four of its five political parties voting against starting the Brexit process.
On the data front, there are no major economic releases from either the UK and the Eurozone today, while the Bank of England’s (BoE) Deputy Governor, Jon Cunliffe will deliver a speech later in the day. Meanwhile in the US, weekly mortgage applications data is up for release.
Pound Sterling – UK Markets
The British economic calendar sports a deserted look today. The only activity is a speech by the BoE Deputy Governor, Jon Cunliffe at the Greater Birmingham Chambers of Commerce. Also, the bill empowering the UK government to begin the formal process of leaving the European Union is due to reach its final stages in the House of Commons later today. Looking ahead, UK is likely to sign off this week with a bang as several crucial economic data points are due to release during the last trading day of this week. These include Britain’s industrial production, manufacturing production, goods trade balance and the NIESR GDP estimate for three months ended January.
Yesterday, Sterling ended higher against the greenback and the shared currency, after Kristin Forbes, an external member of the BoE’s Monetary Policy Committee (MPC) stated that an interest rate rise could soon be warranted, if growth remains solid and inflation continues to accelerate in the UK economy. She also argued that uncertainty surrounding Brexit has been vastly over-exaggerated.
US Dollar – US Markets
The US Dollar ended higher against most of its major peers yesterday, as investors reflect on hawkish comments made by the Philadelphia Fed President, Patrick Harker earlier this week. On the data front, the US trade deficit slightly narrowed in December, as exports advanced to their highest level in almost 2 years, buoyed by record shipments of technology products and outpacing an increase in imports. Further, the nation’s IBD/TIPP economic optimism index registered a rise for February. On the other hand, the monthly Job Openings and Labour Turnover Survey revealed that the number of job openings in the US unexpectedly dropped in December. Also, the nation’s consumer credit rose less than expected during the same month.
Today, weekly mortgage applications data is the sole economic release from the US. Next week, the Federal Reserve Chairwoman, Janet Yellen is set to give an updated assessment of the US economy to key members of the Senate Banking Committee.
Euro – European Markets
The Euro’s weakness is unabated so far this week, as the shared currency continues to trade lower against the greenback and the Pound this morning, dropping for the fourth consecutive session against both. Election jitters have dampened the Euro, as far-right National Front leader, Marine Le Pen launched her presidential bid over the weekend, vowing to fight globalisation and to take France out of the Eurozone. Apart from France, market players have also factored in elections in other parts of the European Union, such as the Netherlands, Germany and possibly Italy. Moreover, the weakness around the shared currency has been exacerbated as of late after the European Central Bank President, Mario Draghi, brushed off the recent uptick in the Eurozone inflation and expressed readiness to increase the current asset purchase programme further. On the data release front, Spanish industrial output rose less than expected in December.
Yesterday, data showed that German industrial production recorded its biggest monthly drop in nearly 8 years in December, amid weak output in manufacturing and construction.
Other Currencies – Highlights
The Japanese Yen has reversed its previous session losses and is trading higher against the US Dollar this morning. The domestic currency has gained foothold against the greenback, amid rising risk aversion as the lingering political and economic uncertainty in the US and Europe weighed on investor sentiment. On the release front, the Bank of Japan’s summary of opinions report from its January meeting revealed that board members acknowledged improvements in Japan’s economy in the form of exports, consumer spending and capital expenditure. However, they warned that it might take time for inflation expectations to pick up and that its 2.0% inflation target continues to remain elusive.
In other economic news, data from the Ministry of Finance showed that Japan’s BOP basis trade surplus widened above expectations in December. In contrast, the nation’s Eco watchers current as well as outlook index surprisingly declined last month. Separately, the US President, Donald Trump and Japanese Prime Minister, Shinzo Abe are scheduled to meet for talks later this week.