Tuesday has seen the vote on Brexit fail to pass through Parliament, and now we have another debate/vote tomorrow to look forward, a free vote for MPs, which, although unlikely, could potentially deliver a “no-deal” scenario, and would see Sterling head sharply lower if that turns out to be the outcome. The UK PM reiterated that the government motion will say that a no-deal Brexit remains the government’s default unless there is a deal, and if MPs vote to leave without a deal, that will become government policy. The more likely scenario is that the “no-deal” option will be rejected , in which case there will be a further vote on Thursday evening, UK time, on extending article 50. Everything is still very much up in the air and either scenario remains a possibility, as well as a second referendum. Ahead of tomorrow’s vote, the UK Chancellor is due to deliver his Spring Budget Statement although this will hardly be noticed.
Earlier in the session the main focus was on the US inflation data. The headline CPI slowed to 1.5% yy (0.2%mm) in February, down from 1.6% yy and missed expectation of 1.6% yy, while the Core CPI also slowed, to 2.1% yy (0.1%mm), down from 2.2% yy, also missing expectations of 2.2% yy.
The outcome of all this was a generally soft US$, with the DXY heading back below 97.00 (96.98) and for now, at least, the dollar’s upside, momentum does seem to be running out of steam. Elsewhere, stocks and commodities have been choppy without doing too much, as were the US indices. The S+P and Nasdaq ended a little higher but the Dow was somewhat weighed down by another rout of Boeing shares (-6.13%), as traders spent the day watching the wild ride taking place in Sterling.
Wednesday will be spent largely in disseminating the Brexit vote although there are a few items of note on the calendar. The day begins with the NZ Food Price Index and the Australian WBC Consumer Confidence. The EU has just the January Industrial Production to focus on (exp +1.0%mm/-2.1%yy) while the US will look to the PPI (Feb exp 0.2%mm/1.9%yy) and the Durable Goods Orders (Jan exp -0.5%mm, Ex-transport +0.1%mm) for guidance.
Economic data highlights will include:
Wed: NZ Food Price Index, Australian WBC Consumer Confidence, Japan Tertiary Industry Index, Brexit Vote, EU Industrial Production, US PPI, Durable Goods Orders, Construction Spending, EIA Crude Oil Stocks Weekly Change
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