33. That’s the number of Tory rebels that voted for the historic Letwin amendment, with 3 ministers having to resign due to defying the party whip. With a 27 member majority, the amendment will see MPs take control of the Commons order paper. This was previously a government prerogative. The first order of business will likely be a series of indicative votes to gauge what kind of Brexit deal has a majority in Parliament. Fears within government believe this is just the start, however, with MPs highly likely to put forward laws to change the course of Brexit for good in the coming sessions. All eyes will be on cross-party talks today as backbench MPs decide on what tomorrow’s indicative votes will look like. Sterling looks like it is wrapped in Kevlar as the news struggles to percolate into the markets price. Fatigue, uncertainty, or sterling topping all possible arguments for this, but despite the pounds reluctance to move interesting developments are occurring in options markets as 3-week implied volatility hits a post-referendum high. The measure used to price hedging instruments, evidenced the inflow of demand as investors expect an explosive end to the Brexit process by April 12th.


The single currency very much welcomed the breather yesterday’s session proved after dismal Purchasing Manufacturing Figures caused a battering trading day on Friday. The price action on EURUSD suggests expectations for the Eurozone are currently very low, given the cross didn’t move closer to the 21-month lows reached earlier this month after the bad news the PMIs brought. Yesterday’s German Ifo Business Climate wasn’t necessarily exhilarating, yet a rebound in the expectations index sowed hopes things may not be getting much worse for the Eurozone economy after all. The expectations index climbed to a three month high at 95.6, which pushed the headline reading above expectations and previous month’s print at 99.6. Finally, it was notable the Ifo confirmed what Friday PMI’s already told us; the manufacturing sector in Germany continues to suffer from a recession, while the outlook for other parts of the economy is actually improving.


Dovish sounding Federal Open Market Committee members kept the greenback pinned yesterday as it had to endure inroads of most G10 currencies. Chicago Federal Reserve President Charles Evans hinted towards a Fed standing ready to potentially even ease policies if the US economic forecasts disappoint, while Philadelphia Fed President Patrick Harker shared he foresees “at most” one rate hike this year. The US 10-year yield curve took the hint and even shortly dipped below the 2.40% yield level, which may have likely kept the greenback offered. Today sees the Building Permits and Housing Starts at 12:30 GMT, followed by the Conference Board Consumer Confidence at 14:00 to complete an interesting data day for the US.


The loonie managed to make some minor gains as the US dollar went bid yesterday despite WTI crude prices failing to break the $60 a barrel mark. As the US-Canadian yield spread stabilises, albeit at a multi-year high, the loonie looks as if it may remain range bound for the time being as higher yields in the US become less of a drag on USDCAD.