Daily Market Update

Pound rises on prospect of Brexit delay, Dollar eases

March 14, 2019

The U.S. Dollar is mostly flat today, primarily at the mercy of the United Kingdom’s crazy week of parliamentary debate and votes on Brexit that have driven most FX action towards Sterling.

Overview

The focus has most certainly been on the other side of the Atlantic, where also a surprise pick-up in economic momentum is helping the Euro recover after the spotlight was on the dovish European Central Bank last week. Additionally, underwhelming inflationary growth here and concerns over a government budget have helped soften the greenback.

A slew of data awaits us tomorrow highlighting regional manufacturing strength in New York with the Empire State survey, the state of consumption based on Consumer Sentiments, and the imperative figure of Industrial Production, which is expected to expand 0.4% after a surprise contraction in January of (-0.6%). The buck could be vulnerable to further losses if the expectation is not met.

 

What to Watch Today…

  • No major events scheduled for today.

Complete Economic Calendar can be found here.

 

EUR

The Euro has recovered by almost a full 1.0% ever since March 7th’s ECB announcement that sank the shared currency to its weakest levels in almost 2 years.  Indeed, the euro has seen a light of hope when it was deep in the tunnel with recessionary signs all over the place. While Italy is technically in recession and Germany has struggled with dwindling data on many fronts, a report today from the German Finance Ministry explained that the start of the year may be a concern, but not for long.

While they said manufacturing is clearly in a bit of a slump that might have difficulty rising back up as the year progresses, all other sectors of the economy are pointing forward and growth shall be moderate. Naturally, Euro will stay afloat with any news that denies the continent is in a rut.

GBP

The Pound fluctuated all over the place yesterday, ultimately improving by almost 0.8% from last night’s close to today. The vote on whether Parliament would find it acceptable to go on with Brexit without a deal resulted in successfully signing a commitment to find a way out with a solution and not just leave without an agreement in hand.

Later on, closer to 2PM, we will know if Parliament votes to delay the process and by how long since it is clear that they will not be ready for anything by the March 29th deadline. Anything that seems like the U.K. will have a deal with the EU or if Parliament proposes a second popular referendum on the Brexit question, will most certainly aid Sterling and push its price higher. There will be wild swings to come.

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