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Global Market Watch - 21st February 2019

The market was expecting three Tory MPs to resign at 11:00 am, and at 11:08 The Telegraph newspaper gave the announcement. Sterling had been slipping in advance of the news, but the effect wasn’t very pronounced and after a small dip, sterling steadied. PM May negotiated her way through question time in the House of Commons and then set off her meeting with EU Commission President, Juncker. The afternoon saw some sterling buying, after the Spanish Foreign Minister said that a Brexit accord was being "hammered out." Although the pound rallied, it didn’t move as far or fast as on Tuesday. This was even after a joint declaration was issued by PM May, and President Juncker saying that the talks were "constructive." Overnight, Fitch rating agency said that it could cut the UK’s AA rating, whilst the UK tabloid press reports that PM May has been told to delay Brexit if there’s no deal or face a revolt at next Wednesday’s vote.

Today could see some focus on the euro, for once, as we have the release of Eurozone first reading services PMI. President Trump has been commenting on US-EU negotiations, and he will impose tariffs if there is a no deal. France’s February business confidence came in at 103 and better than the 102 expected.

The market was relatively quiet, as it waited for the release of the latest FOMC meeting minutes. Fed’s Williams was on the wires and said that a new economic outlook was necessary for rate-hikes, in what was generally seen as a dovish environment for US interest rates. The Fed minutes showed that the FOMC was concerned about slowing global growth and China. Fed's Clarida later commented that they didn’t see their change in policy as a U-turn and that there are no scenarios where the Fed may not hike this year. The dollar regained some poise after these comments. Today we have durable goods data as well as crude inventories for release.

The CAD strengthened alongside the oil price, whilst the AUD and NZD slipped against the dollar, although not substantially. Crude oil inventories are released today, whilst BoC Governor, Poloz, talks later this afternoon. There was confusion in the AUD market last night, as it was initially reported that the Chinese port Dalian had halted Australian coal imports, supposedly on environmental grounds.

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