Apart from the usual tantrums in Washington DC, today was all about Brexit. Yesterday they were close, but the DUP weren’t happy. Today brought the headline many were waiting for – “an agreement between the UK and EU on a Brexit deal”.
Just as news broke that the pound had rallied today following confirmation that a long-awaited Brexit deal had been reached, the cable reversed its gains.
The British pound weakened today, pulling back from its highest level against the dollar in almost five months after hopes of a Brexit breakthrough began to shatter.
Tuesday starts with the same old themes on the table. Brexit negotiations continue with one Irish official stating that “negotiating teams made progress but slow.”
What a week last week was with Brexit and trade negotiations between the US and China taking centre stage. Amazing how both have been making headlines for months and now at almost the same time, both appear to be drawing towards potentially positive solutions.
October 10th has been on the radar for a while. The day the US and China sit down for formal talks on trade. But before the actual event, we had rumours of the Chinese willing to do a deal, followed by rumours of a lower level meeting breaking down and subsequent denial.
According to a report issued by the Institute for Fiscal Studies think-tank, if the UK should leave the EU without a transitional agreement in place, the budget deficit could rise to 4 per cent of gross domestic product.
Ongoing demonstrations in Hong Kong are making most of the early headlines, but the markets choose to shrug them off. By the time the US day begins, FX markets are almost unchanged from the Friday close with AUD and NZD being the only real movers among the major currencies.
The first Friday of the month and we all know what that means. US Non-Farm Payroll data. Not much to report before the number but it does get released against a backdrop of two very weak ISM numbers over the past couple of days.
As the Fed, the USD and the rest of the market are sitting tight in anticipation of today’s Non-Farm Payroll…