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All eyes and ears were still on Brexit throughout the most part of the U.S. session as some signs of progress were seen. PM May has managed to secure the backing of her cabinet for the draft deal and more meetings have been penciled in.

Pound pairs were extra jumpy as a whirlwind of emotions came in play while updates were coming in. Meanwhile, the Kiwi overtook the Loonie to snag the top spot for the day.

  • U.S. headline CPI at 0.3% as expected, 0.1% previous
  • U.S. core CPI at 0.2% as expected, 0.1% previous
  • U.K. PM May has the support of her cabinet for the deal “for now”
  • PM May: Deal firmly in national interest, will be difficult days ahead
  • Barnier says they found a solution to Irish border backstop issue
  • Barnier: “We have taken a big step today toward an orderly withdrawal”
  • Irish PM: Brexit draft deal approval means EU council meeting soon
  • FOMC head Powell: Presser after each meeting means they’re “live”
  • Australian jobs report coming up

Major Events/Reports:

Brexit deal progress

Way to go, PM May! No. 10 managed to win over her cabinet, including those ministers that threatened to resign, and gain the backing for the Brexit draft deal that could pave the way for an orderly breakup with the EU.

In her statement after the meeting, PM May said:

“[T]he collective decision of cabinet was that the Government should agree the draft Withdrawal Agreement and the Outline Political Declaration – this is a decisive step which enables us to move on and finalise the deal in the days ahead.

These decisions were not taken lightly – but I believe it is a decision that is firmly in the national interest.”

Sources reported, however, that there was still some opposition from nearly 10 cabinet ministers. Still, the EU front also had positive things to say, with Barnier citing that they had found a solution to the Irish border backstop issue. Even the Irish PM himself acknowledged that this approval opens the door for an EU council meeting to discuss Brexit later this month.

FOMC head Powell’s speech

Fed Governor Powell was his usual upbeat self in his testimony at an event hosted by the Federal Reserve Bank of Dallas. He reiterated that he’s very happy about how the U.S. economy is doing but warned that about rising fiscal debt.

He also mentioned that holding press conferences after every meeting means that they are all “live” ones now. As for trade issues, he pointed out that the U.S. economy has been able to benefit from it but warned that protectionism would be negative. Powell also noted signs of a global slowdown and that they are monitoring it.

U.S. yields and equities in the red

Equity indices closed another day in negative territory, with financial stocks leading the declines.

  • Dow 30 index is down 205.99 points to 25,080.50 (-0.81%)
  • Nasdaq is down 64.48 points to 7,136.39 (-0.90%)
  • S&P 500 index is down 20.60 points to 2,701.58 (-0.76%)

Bond yields were off to a good start on improving sentiment on the Brexit deal text cabinet approval and inflation figures meeting expectations. However, the tide turned when stock indices looked poised for yet another negative finish.

  • 5-year yield is down to 2.955%
  • 10-year yield is down to 3.1213%
  • 30-year yield is down to 3.3551%

Major Market Mover(s):

GBP

The pound carried on with its volatile run as traders seemed to be reacting to almost every Brexit-related update throughout the session. It managed to end slightly higher against most of its rivals after PM May’s cabinet backed the Brexit deal text.

GBP/USD climbed from 1.2918 to 1.3031 then slumped back to a low of 1.2882 then rallied back up to a high of 1.073. GBP/JPY advanced to 148.35 then slipped to a low of 146.32 then jumped to a high of 148.39. GBP/CAD tossed and turned before closing at 1.7240 and EUR/GBP is down to .8682.

NZD

The Kiwi was able to claw its way to the top spot at the end of the session, possibly taking advantage of some improvement in sentiment and a bit of dollar weakness on lower yields.

NZD/USD climbed to a high of .6808; NZD/JPY is up to a high of 77.47; EUR/NZD slipped from a session high of 1.6708 back to the 1.6650 area, and NZD/CAD is up to the .9000 mark.

Watch Out For:

  • 12:00 am GMT: Australia’s MI inflation expectations (4.0% previous)
  • 12:30 am GMT: Australian employment report (Here’s what to expect)
  • 1:30 am GMT: RBA’s Assistant Gov. Debelle’s speech