The US$ is under some downside pressure again on Wednesday, with the main interest lying in Sterling which has shot to a 6 month high after the UK moved towards avoiding no-deal Brexit. The UK PM, Theresa May, announced to hold three separate votes on a Brexit deal, no-deal Brexit or to delay; the main point being, a no-deal Brexit is no longer the default position on March 29, although it could still happen with explicit consent of the Parliament.
Elsewhere, Fed Chair Jerome Powell reaffirmed that the Fed are ready to wait and see how economic/political events unfold before making any decision on when next to raise rates and the cautious tone did little to underpin the dollar, which ended the US session under some mild downside pressure. US yields were a touch lower (US10Y; 2.63%) while stocks, WTI and the metals were all pretty much flat at the end of the session as traders took away few fresh insights from Powell’s testimony before Congress.
In terms of data, the dollar was not helped by a big downside surprise in the December Housing Starts which came in at -11.2%, versus the forecast of +3.2%. Earlier in the day, the German GfK consumer confidence for February was unchanged at 10.8, but economic expectations dropped by 6.5 points, to 4.2, the fifth decline in a row and the lowest reading since March 2016.
Wednesday will be busy again, beginning with the NZ January Trade Balance (exp -$300 mio mm, -$5.496 bio yy) and the Australian Construction Work Done for Q4 (exp 0.4%). Later on from Europe, we get the EU Economic Sentiment Indicator, Industrial Confidence, Services Sentiment, Business Climate and Consumer Confidence and speeches from the ECB’s Coeure and the Buba’s Weidmann. From the US we get the January Durable Goods Orders (exp 0.2%mm), and the December Wholesale Inventories and Goods Trade Balance (exp -75.03 bio).
Economic data highlights will include:
Wed: NZ Trade Balance, Australian Construction Work Done – Q4, EU Economic Sentiment Indicator, Industrial Confidence, Services Sentiment, Business Climate, US Wholesale Inventories, Durable Goods, Pending Home Sales, Fed Chair Powell testimony to Congress.
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