The forex markets are staying in consolidative mode today. Sterling rises notably as some Brexiteers are finally agreeing that Prime Minister Theresa May’s deal is better than no Brexit. At least, there is a chance for future governments to adjust the relationship with EU further. But in any case, traders will likely stay cautious ahead of tomorrow’s vote on Brexit alternatives. Following the Pound, Australian Dollar is the second strongest, followed by Dollar.
Meanwhile, CAC leads European stocks higher as Airbus secured a giant deal with China during President Xi Jinping’s EU visit. But after all, major pairs and crosses are bounded in familiar range. Yen is the weakest one for today as risk sentiments improved. Euro’s is surprisingly the second weakest, followed by Swiss Franc.
Technically, there is no clear sign of break out in most pairs yet. Though, EUR/USD is rejected by 4 hour 55 EMA as yesterday’s recovery lost stem. Immediate focus is back on 1.1273 temporary low and break will extend the fall from 1.1448 to 1.1176 low. WTI crude oil is back above 60 and focus will be on last week’s high at 60.36. Break will resume medium term up trend.
In Europe, FTSE is currently up 0.22%. DAX is up 0.30%. CAC is up 0.74%. German 10-year yield is up 0.011 at -0.014. Earlier in Asia, Nikkei rose 2.15%. Hong Kong HSI rose 0.15%. China Shanghai SSE dropped -1.51%. Singapore Strait Times rose 0.55%. Japan 10-year JGB yield rose 0.0176 to -0.66.
Released from US, housing starts dropped to 1.16M annualized rate in February, below expectation of 1.22M. Building permits dropped to 1.30M, missed expectation of 1.32M. House price index rose 0.6% mom in January. S&P Case-Shiller 20 cities house price rose 3.6% yoy in January.
Fed Evans: Scale of China and Europe slowdown watched to determine impact on Fed policy
Chicago Fed President Charles Evans said today that Fed will monitor the slowdown in China and Europe to determine any policy actions. And, “it depends a lot on how large the slowdown would be in China, and how big the headwinds would be from European deceleration as well”.
Evans also referred to what happened in the past few years on monetary policy. “We were about ready to start raising rates then additional uncertainty pushed us off until December 2015,” he said. “And then the uncertainty of 2016 made us wait again until end of 2016.”
In the same event in Hong Kong, Boston Fed President Eric Rosengren said policymakers are “really focused on domestic economic conditions generally in the United States,” but “to the extent that it does affect the United States, we fully take that into account.”
Rees-Mogg and Fabricant agree May’s Brexit deal is better than not leaving at all
Brexit hardliner Jacob Rees-Mogg reiterated his backing to Prime Minister Theresa May’s deal as it’s better than no Brexit. He tweeted that “The choice seems to be Mrs May’s deal or no Brexit.” Also, Rees-Mogg explained in the Monday Moggcast podcast that “I’ve always thought that no deal is better than Mrs. May’s deal, but that Mrs. May’s deal is better than not leaving at all.” While May’s deal is “in no way a good deal, Rees-Mogg said: “against that there are the threats of a long delay, and many people in Parliament who want to frustrate the result of the referendum.”
Conservative MP Michael Fabricant echoed as that it’s the “dreadful conclusion” he came to too. And “a new PM can then negotiate a better and more distanced relationship with the EU after Brexit. (Of course this is the least worst option but the only practical way forward for now.)” Fabricant also said: “The practical alternatives are far worse that the Withdrawal Agreement including keeping us in the Customs Union and Singl