UK Seeks Another Short Extension Of Article 50 Until Jun 30th

Fundamental analysis of Forex market


  • UK confirmed that PM May sent EU’s Tusk a letter asking for an extension to Article 50 until Jun 30th (as speculated) and would EU parliament elections in case it can’t ratify withdrawal agreement
  • German Feb Industrial data bucks the recent trend and beats expectations


  • China Vice Premier Liu He stated that new consensus reached on text related to US/China economic and trade agreement; to continue to work hard to conclude trade talks ASAP. Told US President Trump the two sides reached new consensus on important issues, including the trade deal texts.
  • Japan Feb Real Cash Earnings saw its fastest decline since Jun 2015 (YoY: -1.1% v +0.8%e); Labor Earnings Y/Y: -0.8% v +0.9%e – BOJ Quarterly Public Opinion of Household Sentiment: Households maintained its 1-year inflation outlook at 3.0% and 5-year inflation outlook at 2.0%


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  • UK PM May said to be writing to EU’s Tusk on Friday, Apr 5th to formally request a Brexit extension and seek a termination clause which allowed the UK to leave the day before Euro elections on May 22nd. UK Govt officials were working on a formal letter to labour setting out terms of a deal but the prospects of 2nd referendum being included in any package being played down
  • Some UK cabinet ministers reportedly attempting to block a long Brexit postponement. PM May said to not yet secure cabinet support for long extension but ministers fear she would press ahead anyway – EU’s Tusk said to offer UK a 12-month extension on Brexit. The plan would allow the UK to leave sooner if a deal was ratified by parliament but needed to be agreed at next week’s EU summit


  • President Trump stated that a China trade deal could be within the next four weeks; something ‘very monumental’ could come soon. Co;ld have a summit with President Xi in Washington if an agreement was reached. Should know in the next 4 weeks. Talks might continue for four weeks and another two after that to get it on paper
  • President Trump: nominations of Cain and Moore to the Fed were not meant to send any signal whatsoever to the Fed
  • Fed’s Harker (hawk, non-voter): Still in wait and see mode, expects at most one rate hike this year and one hike in 2020
  • Fed’s Mester (hawk, non-voter): it’s possible Fed was done with rate increases; rate rises were still needed if economy met expectations


  • Saudi Arabia said to have discussed plans to ‘ditch the US dollar’ from oil trades if the US passed NOPEC as it would expose members of OPEC to US antitrust lawsuits. (Note: NOPEC bill not expected to pass in the US and the threat related to the US dollar could be part of Saudi Arabia’s contingency planning)



  • Indices [Stoxx600 +0.0% at 388.0, FTSE +0.1% at 7410, DAX -0.10% at 11975, CAC-40 +0.1% at 5468, IBEX-35 +0.1% at 9538, FTSE MIB +0.3% at 21773, SMI -0.30% at 9535, S&P 500 Futures +0.2%]
  • Market Focal Points/Key Themes: European Indices trade flat in a lackluster session ahead of March US Jobs numbers. Asian Indices were mixed with Tech giants Samsung Electronics and LG Electronics reporting prelim Q1 results which were slightly shy of consensus. US futures trade slightly hgiher following a mixed session yesterday. On the corporate front, Alpiq shares rise after Swiss investors acquire EDF’s stake for CHF70/shr; Salini Impregilo gains almost 10% after a A$5.1B contract in Australia. On the earnings front, Eckert & Ziegler gains on final earnings, with EMS Chemie, Kid ASA and Rosenbauer all advancing on earnings. Elsewhere Purple Bricks declines on a downgrade, with Funding Circle another notable decliner as the board acknowledges holders preference to cease investment in new Credit Assets. Looking ahead notable earners include Greenbrier and Northern Technologies.


  • Consumer discretionary: Befesa [BFSA.DE] -4.1% (Placing)
  • Energy: Alpiq [ALPH.CH] +9.4%, EDF [EDF.DE] +0.9% (EDF sells Alpiq stake to investors for CHF489M), Saipem [SPM.IT] +3.1% (contract wins)
  • Financials: Purplebricks [PURP.UK] -7.7% (Analyst downgrade), Funding Circle [FCH.UK] -7.0% (Investors to cease more investment in new credit assets)
  • Healthcare: Eckert & Ziegler [EUZ.DE] +6.8% (Earnings), Novozymes [NZYMB.DK] +2.8% (Raises outlook)
  • Industrials: Salini Impregilo [SAL.IT] +8.0% (Australian contract), EMS Chemie [EMSN.CH] +4.5% (Earnings)


  • Italy Cabinet said to approve a series of growth measures (as expected). Growth Decree contained incentives including measures to encourage a restart of private investment as well as actions to safeguard the “Made in Italy” brand
  • Italy Stats Agency (Istat) Monthly Economic Note saw the potential end to contraction in the domestic economy
  • Details of PM May letter to Tusk being released; UK to ask for an extension to Article 50 until Jun 30th (as speculated). UK to seek ratification of deal by May 23rd but would prepare for EU Parliamentary elections in the event the UK Parliament fails to ratify a Withdrawal Agreement
  • UK Labour Dep leader Watson: Need some more time to explain our party position to PM May. If no confirmatory Referendum ballot was agreed upon with Govt then there could be difficulty with the Govt
  • Eurogroup chief Centeno commented ahead of an informal finance minister meeting that were continuing to debate the Euro Zone budget but not yet discussing the size.
  • France Fin Min Le Maire: Concerned over growing divergences in member States; region’s future at stake if divergences not reduced. Euro Zone budget was the right tool for convergence. Needed to have banking consolidation in Europe. Too soon to discuss top EU and ECB positions. Reiterated that need to understand what the Brexit extension would be for
  • German Fin Min Scholz: Glad we came this far with the Euro-Zone budget
  • Switzerland Govt said to propose changes to banking law and strengthen the sector against property market losses. Govt to raise bank’s risks weights for buy-to-let loans

Currencies/Fixed Income

  • EUR/USD was slightly higher after German Feb Industrial Production beat expectations. Focus turning towards next week’s ECB meeting but analysts were not expecting any new policy actions expected as ‘inflation was delayed, not derailed’. Draghi to strike an overall cautious tone and the ECB to keep its downside risks assessment on growth. Pair currently at 1.1225 area
  • GBP was firmer as speculation was confirmed that PM May sent EU’s Tusk a letter asking for an extension to Article 50 until Jun 30th and would EU parliament elections in case it can’t ratify withdrawal agreement. Reports circulated that EU was prepared to call for 12-month “flexible” Brexit delay once the UK govt ratified the Withdrawal Agreement. Pair holding below the 1.31 area ahead of the NY morning.

Economic Data

  • (SE) Sweden Feb Maklarstatistik Housing Prices Y/Y: 0% v 0% prior; Apartments: 0% v 0% y/y prior
  • (DE) Germany Feb Industrial Production M/M: 0.7% v 0.5%e; Y/Y: -0.4% v -1.4%e
  • (NO) Norway Feb Industrial Production M/M: -1.8% v -2.2% prior Y/Y: -5.7% v -3.4% prior
  • (NO) Norway Feb Manufacturing Production M/M: -0.3% v +0.3%e Y/Y: 3.1% v 4.0% prior
  • (DK) Denmark Feb Industrial Production M/M: -1.2% v -7.4% prior
  • (ZA) South Africa Mar Gross Reserves: $49.7B v $50.8B prior; Net Reserves: $43.3B v $43.7B prior
  • (FR) France Feb Trade Balance: -€4.0B v -€4.6Be
  • (FR) France Feb Current Account Balance: -€0.8B v +€0.3B prior
  • (ES) Spain Feb Industrial Output NSA Y/Y: -0.2% v 1.8% prior; Industrial Output SA Y/Y: -0.3% v -0.1%e; Industrial Production M/M: -1.1% v -1.0%e
  • (CH) Swiss Mar Foreign Currency Reserves (CHF): 756.0B v 740.6Be
  • (HU) Hungary Feb Industrial Production M/M: 1.0% v 0.6% prior; Y/Y: 5.9% v 5.1%e
  • (CZ) Czech Feb Retail Sales Y/Y: 3.8% v 2.3%e; Retail Sales (ex-auto) Y/Y: 5.1% v 4.5%e
  • (AT) Austria Mar Wholesale Price Index M/M: 0.3% v 0.7% prior; Y/Y: 2.9% v 2.3% prior
  • (MY) Malaysia end-Mar Foreign Reserves: $103.0B v $102.6B prior
  • (UK) Mar Halifax House Prices M/M: -1.6% v -2.8%e; 3M/Y: 3.2% v 2.1%e
  • (SE) Sweden Mar Budget Balance (SEK): 12.0B v 41.1B prior
  • (RU) Russia Narrow Money Supply w/e Mar 29th (RUB): T v 10.23T prior
  • (UK) Q4 Unit Labor Costs Y/Y: 3.1% v 2.9% prior

Fixed Income Issuance

  • (IN) India sold total INR170B vs. INR170B indicated in 2021, 2026, 2031, 2039 and 2055 bonds

Looking Ahead

  • (EU) European Finance Ministers (EcoFin) hold informal meeting
  • (IT) Bank of Italy (BOI) Feb Balance sheet aggregates Target2 Liabilities at €B vs. €482.8B prior
  • 05:45 (NO) Norway Sovereign Wealth Fund white paper
  • 06:00 (UK) DMO to sell €5.0B in 1-month, 3-month and 6-month bills £1.5B, £1.5B and £2.0B respectively)
  • 06:30 (IS) Iceland to sell 2028 RIKB 2028 Bonds
  • 06:45 (US) Daily Libor Fixing
  • 07:30 (CL) Chile Feb Economic Activity Index (Monthly GDP) M/M: 0.0%e v 0.3% prior; Y/Y: 2.0%e v 2.4% prior; Economic Activity (ex-mining) Y/Y: No est v 3.1% prior
  • 07:30 (IN) India Weekly Forex Reserves w/e Mar 29th: No est v $406.7B prior
  • 08:00 (UK) Baltic Bulk Index
  • 08:00 (PL) Poland Mar Official Reserves: No est v $112.5B prior
  • 08:00 (CL) Chile Feb Nominal Wage M/M: No est v 0.8% prior; Y/Y: No est v 3.8% prior
  • 08:00 (ES) Spain Debt Agency (Tesoro) announces upcoming issuance
  • 08:00 (IN) India announces upcoming bill issuance (held on Wed)
  • 08:30 (US) Mar Change in Nonfarm Payrolls: +177Ke v +20K prior; Change in Private Payrolls: +177Ke v +25K prior; Change in Manufacturing Payrolls: +10Ke v +4K prior
  • 08:30 (US) Mar Unemployment Rate: 3.8%e v 3.8% prior; Underemployment Rate: No est v 7.3% prior; Labor Force Participation: 63.2%e v 63.2% prior
  • 08:30 (US) Mar Average Hourly Earnings M/M: 0.3%e v 0.4% prior; Y/Y: 3.4%e v 3.4% prior
  • 08:30 (CA) Canada Mar Net Change in Employment: +6Ke v +55.9K prior; Unemployment Rate: 5.8%e v 5.8% prior; Full Time Employment Change: +5.4Ke v +67.4K prior; Part Time Employment: +7.0Ke v -11.6K prior; Participation Rate: 65.7%e v 65.8% prior; Hourly Wage Rate Y/Y: 2.2%e v 2.2% prior
  • 09:00 (RU) Russia Mar Official Reserve Assets: $488.6Be v $482.6B prior
  • 10:00 (MX) Mexico Mar Vehicle Production: No est v 311.8K prior; Vehicle Exports: No est v 271.1K prior
  • 10:30 (TR) Turkey Mar Cash Budget Balance (TRY): No est v -25.9B prior
  • 11:00 (EU) Potential sovereign ratings after European close
  • 13:00 (US) Weekly Baker Hughes Rig Count data
  • 15:00 (US) Feb Consumer Credit: $17.0Be v $17.1B prior
  • 15:30 (US) Fed’s Bostic (dove, non-voter) discusses Disruption and Opportunity
  • 20:00 (CO) Colombia Mar CPI M/M: 0.3%e v 0.6% prior; Y/Y: 3.1%e v 3.0% prior
  • 20:00 (CO) Colombia Mar CPI Core M/M: No est v 0.6% prior; Y/Y: No est v % prior
  • (MX) Mexico Citibanamex Survey of Economists

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