News & analysis


Sterling continues to be riddled with Brexit uncertainty as the pressure on Theresa May ramped up over the weekend. It was widely reported in the standard media outlets that cabinet ministers were set to resign if May didn’t step down. However, the speculation ended there and May starts Monday morning with a cabinet still fully stocked with Ministers after meetings in Chequers over the weekend. One by one, they came out to bat for May with David Liddington, the deputy PM, and Philip Hammond, the Chancellor of the Exchequer, stating their support for the Prime Minister. The parliamentary calendar is jam-packed today, with an emergency cabinet meeting scheduled for 10:00 GMT, a statement to the Commons from May at 15:30 GMT and a series of amendment votes at 22:00 GMT. The morning cabinet meeting remains key as Downing Street officials suggest that May will float the idea of putting a series of seven votes to Parliament. The move by the PM is to retain control of the Brexit process from Parliaments grasp and would see MPs vote on the possible exit deals; PM’s deal, no deal, a second referendum, revoking Article 50 and thus cancelling Brexit, a Canada-style free trade agreement, a customs union, and joining the single market. The indicative votes are not legally binding but could provide the market with some much-needed clarification as it still awaits the timing of the third meaningful vote, if it is set to occur.


The euro took the disastrous Purchasing Manufacturing data on the chin on Friday and fell as much as a full percent against the greenback, and even more against JPY and GBP. The manufacturing sector was the main culprit for the drop of the composite PMI to 51.3, as a slowdown mostly in new orders had the Flash Manufacturing PMI drop to 47.6. These new orders fell at the quickest pace in three years in France, while the German figures were even worse; new orders declined at the fastest pace since the financial crisis, while for the first time in three years the sector actually shed workers. The Services Sector saved the day and proved resilient, coming in 52.7 for March, however, in total this still only points towards very sluggish growth in the Eurozone for Q1, Q2 and possibly beyond. The downturn evidenced the depth of the anticipated global growth slowdown and sparked investor fears, especially in Emerging Markets. This week brings the German Ifo Business Climate on Monday at 9:00 GMT, while a ton of European Central Bank Speakers have been sprinkled royally all over the rest of the week.


USD was among the strongest major currency performers on Friday on a day that had a strong scent of “eau de risk-off” hanging around it after dismal Eurozone PMIs fanned worries about global growth. This morning, no relieve rally followed on the grandeur headlines this weekend acquitting President Donald J. Trump from accusations of collusion with Russia. Robert Mueller, the US Justice Department Special council, concluded that neither the President nor his presidential campaign unlawfully cooperated with Russians. Trump may have escaped going under in the Siberian legal quicksand, however, Mueller’s letter to Congress was ambiguous enough to keep the door open for further investigations into obstructions of justice cases by the current US president. The story, thus, continues. For action from the data front, we’ll have to wait until Friday for the Core Personal Consumption Expenditures, while several Federal Reserve speakers are spread out over the week to provide more context to the decision of the Fed last week to signal zero rate hikes for 2019.


The loonie fell half a percentage point on Friday as the market entered a classic risk-off environment. The threat filtered into crude markets as manufacturing data showed that future demand may be weaker than expected, and WTI prices fell 83 cents. Meanwhile, the data released did little to stem the loonies losses as Retail Sales came in substantially weaker than expected at -0.3% MoM. This came despite the slight uptick in CPI to 1.5% YoY.