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Sterling up again on potential Brexit deal but has plenty to deal with today

Published: Tuesday 12 March 2019

  • Japanese manufacturing takes a hit
  • Australian business confidence falls
  • US data centres on consumers and central bank

​​By David Johnson

Sterling is testing levels against the Euro that we haven’t seen since May 2017. The factors at play are another poor trade balance figure from Germany (just EUR 18.5 billion against a forecast of 21.2 billion) and, of course, the latest developments in the UK Prime Minister’s plans to compete on Brexit. Overnight announcements that the EU has given a last-minute concession over the Irish Border plans were greeted well by the markets and Sterling rose again. The Pound starts the day round EUR 1.17 and USD 1.32 but it has to contend with, not only a bunch of political posturing, but also the UK economic growth data for January. That is unlikely to be supportive of the Pound.
We will also have trade balance and industrial production data for the UK this morning. Overall, the data ought to be mildly supportive of the Pound. This afternoon’s National Institute of Economic and Social Research (NIESR) Gross Domestic Product (GDP) growth estimate for the month is unlikely to be market moving, as long as the forecasts of around 0.2% are in keeping with the actual report. However, the parliamentary vote on Brexit later this evening will be what concentrates minds during the day. I suggest NOT watching rolling news reports if you don’t want to hear the same old guesswork trawled out for the next 12 hours.
Japanese manufacturing takes a hit

Overnight, the Japanese Yen was knocked by a shockingly bad survey of large manufacturers in Japan. The index was at 5.5 last month and the forecasts were for just 4.4 or thereabouts this time around, but the actual number was minus 7.3. That’s pretty dire by anybody’s standards, but reflects the slowdown in global demand.
Australian Business Confidence falls

The Australian Business Confidence Index was also weaker this month. An index reading of just two is below expectations and just half of last month’s, already poor reading. The Australian Dollar is a smidgeon weaker on the news.
US data centres on consumers and central bank

US data today is limited to consumer inflation and that is expected to be roughly 2.2%; high enough to keep the Federal Reserve interested, but not enough to cause interest rate hike tremors. There are a few Federal Reserve speakers today, so we may get to hear what they think about the stats.
Water way to learn

And I missed this story last week, but I am delighted to have spotted it because it proves a part of my youth was not wasted after all. A yachtsman, thrown from his boat in rough seas, stayed afloat for three hours – long enough to be rescued – by tying the legs of his trousers and inflating them to use them as a float. I remember so clearly wondering why on earth I was in my local swimming pool in pyjama bottoms, but now I know why. Thank you, yachtsman, Arne Murke for confirming that part of the swimming badge effort wasn’t just a wind up for the benefit of the instructors. Now, has anyone ever had to retrieve a rubber brick from the bottom of any body of water anywhere?

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Today's Major Economic Releases

Market BST Data/Event Previous Expected
GBP All Day UK: Parliament Brexit Vote Reject Reject
EUR All Day The Economic and Financial Affairs Council    
GBP 09:30 UK: Gross Domestic Product -0.4% 0.2%
GBP 09:30 UK: Manufacturing Production -0.7% 0.2%
GBP 09:30 UK: Goods Trade Balance -12.1b -12.2b
USD 13:30 US: Consumer Price Index 0.0% 0.2%
USD 13:30 US: Core Consumer Price Index 0.2% 0.2%

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