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Sterling Softens as Traders Await Brexit Clarity, Aussie Lost Momentum after Initial Rally

Sterling is trading as the weakest one for today so far after suffering some selling in European session. No support is seen for the Pound even though high profile Brexiteer Jacob Rees-Mogg indicated that he might support Prime Minister Theresa May’s Brexit deal. However, loss is limited in Sterling as the overall picture remains unclear. For now, it’s uncertain whether the government will pull tomorrow’s Brexit meaningful vote due to far insufficient support.

Staying in the currency markets, Australian Dollar was lifted earlier today by strong rally in Chinese stocks. But it lost some momentum after European markets turned mixed. Also, the Aussie will facing tests from RBA minutes as well as house price data in the upcoming session. Euro picked up some strengthen even though Bundesbank warned of subdued German growth in Q1. Rise in German yield is unpinning Euro for now. Overall, the markets lack clear direction in early US session.

In Europe, FTSE is up 0.64%. DAX is down -0.30%. CAC is flat. German 10-year yield is up 0.0094 at 0.095, getting close to 0.1 handle. Earlier in Asia, Nikkei rose 0.62%. Hong Kong HSI rose 1.37%. China Shanghai SSE rose 2.47%. Singapore Strait Times rose 0.40%. Japan 10-year JGB yield rose 0.002 to -0.035.

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On the data front, Canada international securities transactions rose CAD 28.4B in January. Eurozone trade surplus widened to EUR 17.0B in January, missed expectation of EUR 17.2B. UK Rightmove house price rose 0.4% mom in March. Japan industrial production was finalized at -3.4% mom in January, trade surplus widened slightly to JPY 0.12T in February.

Bundesbank: German growth subdued in Q1 as consumption offset by weak manufacturing

Bundesbank said in the monthly report that German economic growth remained subdued in Q1. The main reasons include weak industrial production, falling auto exports and deteriorating manufacturing sentiment. Manufacturing sector would drag down overall economic performance for the third straight quarter.

On the other hand, construction and private consumption should provide support to the economy. Employment also continues to rise despite slowdown. Bundesbank added that private consumption could pickup significantly as signaled by strong increase in retail sales.

German FM Scholz : Some richer countries only think of their own interest

German Finance Minister Olaf Scholz warned in at the World Policy Forum in Berlin that trade conflicts are damaging the world. Without naming any country, he singled out “richer countries” who only think of their own interest. At the same time, he also urged Europe to have one voice to have more bargaining power.

Scholz said “trade conflicts, as we have seen over the last months – especially between richer countries only thinking of their own interest – are damaging the world economy”. He added that “trade policy has been an EU-level responsibility for a long time”. And, “it is obvious that we have much more bargaining power if we speak with one European voice… only together we are able to set and enforce standards of fair trade.”

EU to seek China agreement to open up market in upcoming summit

Reuters reported that EU is