Loonie traders seem to be looking forward to the BOC rate decision this week as the Canadian currency held on to the top spot even while crude oil was mostly unchanged.
On the other hand, sterling was still behind its peers as the possibility of a “no deal” Brexit is looming and the U.K. government couldn’t seem to get its act together.
- Canadian wholesale sales down 0.1% vs. projected 0.1% uptick
- Australia’s CB leading index up 0.2% after earlier 0.1% increase
- Italian Deputy PM Di Maio: There’s still time to discuss budget on EC rejection
- Canadian Foreign Minister Freeland: U.S. steel tariffs are unjustified and illegal
- U.K. PM May: Four steps must be taken to get Brexit deal done
- May: Not committed to extending transition period but preferable to backstop
U.K. PM May’s speech
The clock is ticking for the U.K. to strike an agreement with the EU to avoid a “no deal” Brexit, so PM May is rallying up confidence on the home front with her speech in the House of Commons.
No. 10 reiterated that she needs more time to “deliver the Brexit that the British people voted for” and explained that there are four steps that must be taken in order to seal the deal:
- A firm legally-binding commitment to the EU-UK temporary customs arrangement
- An option to extend the implementation period as an alternative to the Irish border backstop
- An option for the U.K. to leave at will and not be locked into any arrangement
- Full access for all of Northern Ireland businesses to Great Britain
PM May didn’t seem sold on the idea of extending the transition period by a year either but stated that this would be preferable to a backstop, citing:
“There are some limited circumstances in which it could be argued that an extension to the implementation period might be preferable if we were certain it was only for a short time.”
Earlier on, Brexiter Steve Baker withdrew an amendment to the Northern Ireland bill which would’ve made it illegal for the U.K. to agree to a Northern Ireland-only backstop. This keeps more options open for PM May in case the EU refuses to back down on its Irish border demands.
Some risk-on flows
It was a data-light session, so gains and losses in the financial markets were limited while traders looked ahead to other top-tier events in the week.
U.S. indices were mixed, with the Nasdaq getting a boost from the tech sector rally:
- Dow 30 index is down 126.93 points to 25,317.41 (-0.50%)
- S&P 500 index is down 11.90 points to 2,755.88 (-0.43%)
- Nasdaq is up 19.60 points to 7,468.63 (+0.26%)
Gold returned some of its safe-haven gains while crude oil cruised sideways.
- Gold is down to $1,226.07 per troy ounce (-0.35%)
- WTI crude oil is holding steady around $69.15 per barrel (+0.01%)
Major Market Mover(s):
The Loonie managed to edge out most of its rivals and secure the top spot during the New York session, likely as traders are positioning ahead of the BOC decision.
USD/CAD fell from a session high of 1.3127 to a low of 1.3099; CAD/JPY bounced off 85.90 to 86.13; EUR/CAD inched down from 1.5063 to 1.5017; GBP/CAD retreated to 1.6984, and AUD/CAD fell to.9265.
Sterling carried on with its slide as PM May’s speech failed to spur confidence that the U.K. government can secure a good Brexit deal.
GBP/USD fell from 1.3005 to consolidate around 1.2970; GBP/JPY is down from 147.57 to 146.23; EUR/GBP popped up to .8850, and GBP/CHF slid to 1.2916.
Watch Out For:
- 3:00 am GMT: RBA Assistant Gov. Bullock’s speech
- 4:30 am GMT: RBA Assistant Gov. Debelle’s speech
- 5:00 am GMT: Japan’s BOJ core CPI y/y (0.5% previous)