Brussels rejects UK’s Brexit proposal



After the EU rejected Prime Minister Theresa May’s Chequers plan for Brexit last week, May is being urged to look further afield and create world trade deals that could boost the UK economy by £80billion a year. Further, Brexit Secretary Dominic Raab has stated that if the EU do not agree to a trade deal, he would consider withholding the £40billion Brexit divorce bill settlement.

Sterling was pressured lower by a trifecta of weaker-than-expected macro data last week – employment, CPI and retail sales. Brexit related uncertainty was also at play early in the week, but the pound bounced after Prime Minister Theresa May scraped through a Commons vote on the trade bill on Tuesday.

GBP/USD slipped to its lowest level since last September at 1.2958 on Thursday before bouncing back above 1.31 on Friday after hawkish remarks from the Bank of England’s Tenreyro. The pair has begun this week with a modest bid, inching up to 1.3150.

Data releases are light this week with only CBI orders tomorrow, mortgage approvals on Wednesday and house price data on Friday. Ongoing Brexit negotiations will continue to drive market direction.


The Dollar Index hit a one-year high on Thursday at 95.65, bolstered by stronger-than-expected macro data and upbeat remarks from Federal Reserve Chair Jerome Powell who appeared before Congress. Gains failed to last into the weekend however with the Dollar falling sharply late Thursday and then again on Friday after US President Trump twice bemoaned the strength of the US currency and questioned whether the Federal Reserve should continue raising interest rates.

Looking ahead, existing home sales are out later today, manufacturing and service PMI follow tomorrow, new home sales on Wednesday, durable goods on Thursday and GDP on Friday.


The European Central Bank meet on Thursday where President Mario Draghi will likely be grilled over his “at least through the summer of 2019” comment in regard to not hiking interest rates until the middle of next year at the earliest.

Euro Zone core CPI data was revised lower on Thursday but was largely ignored with EUR/USD reclaiming the 1.17 handle on Friday.

Besides Thursday’s ECB policy meeting, we await manufacturing and service PMI prints from the bloc tomorrow, German IFO on Wednesday and French GDP on Friday.


The Japanese Yen has begun the week as the G10 outperformer amid speculation that the Bank of Japan could discuss tweaking their policy stance and the yield curve target to allow for a long term natural increase. USD/JPY broke below the 111 handle this morning to a low of 110.75.

Looking ahead, we await manufacturing PMI and the leading economic index tomorrow ahead of Tokyo CPI on Friday.


The Swiss Finance Minister said on Thursday that the Franc is overvalued but they can live with it. He added that they like EUR/CHF around the 1.20 level. The pair has opened this week at around 1.1630 having got down to a two-week low of 1.1603 last Wednesday.

This week we look ahead to ZEW data on Wednesday.


Rising trade tensions and a weaker Yuan pushed AUD/USD to its lowest level since July 3rd on Friday at 0.7318 but the pair later bounced amid speculation of Chinese intervention. Thursday’s labour market data was also stronger-than-expected and will have provided support to the Aussie Dollar.

Looking ahead, Wednesday’s CPI data will likely be the main focus for investors ahead of import prices on Thursday and PPI on Friday.


The Canadian Dollar rose sharply on Friday, boosted by stronger-than-expected readings for retail sales and CPI. Aided also by a weaker US Dollar, USD/CAD dropped to a low of 1.3113 on Friday.

This week brings wholesale sales and the budget balance follows on Friday.


There were some mixed impulses for the New Zealand Dollar last week. Tuesday’s CPI data came up short of estimates but more attention was paid to the RBNZ inflation expectations measure which hit a seven-year peak – this pushed NZD/USD to a weekly high of 0.6842. The pair has inched higher this morning to a peak of 0.6826.

Unemployment and trade figures are released on Wednesday.


Domestic impulses were limited last week with no Swedish data releases to note. EUR/SEK hit its best level since July 3rd on Friday at 10.4097.

This week we await PPI data on Wednesday, confidence indicators and unemployment on Thursday and retail sales on Friday.


EUR/NOK rounded off a five-day winning streak on Friday by reaching its highest level since May 15th at 9.6222. Domestic impulses were limited however with no Norwegian macro releases last week.


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