Political events dictate the markets

Brexit Talks continue

As we move into a new week it seems to be the same story with the currency market continuing to be dictated by political going on’s from around the world. On Friday afternoon Theresa May delivered a speech to the publicity surrounding the current Brexit talks. One of the key topics of her speech was the treacherous issue of the Irish border which in mid-week caused sterling to lose over a cent against the Euro with the surrounding uncertainty of the situation, however she proposed “a trusted trader scheme, for businesses either side of the Irish border,” This was a seemingly positive starting point for the negotiations but it remains to see when this issue is to be resolved.

Brexit negotiations continue between the UK and the Eurozone but we still may be some time away from a breakthrough with May quoting to say “we recognise there are tensions in both sides positions. But we must recognise that it is a negotiation, and both sides cannot get everything they want.” Which suggests we are some way from any form of agreement.

Merkel forms a coalition government

Germany’s Social Democratic Party voted to renew a coalition with Chancellor Angela Merkel’s Democrats, making way for her fourth term after nearly six months of political deadlock in the country. The new government could be formed and in place by the end of March. With this positive news for the Euro, there has been no movement in the currency market, the Euro is likely to gain on the majors once the collation government is officially formed which again should be anytime within this month.

Italian elections look to be locked in a hung parliament

Italy looks to be on course for a hung parliament after voters went to the polls yesterday evening. It was expected that the vote would be very close and was reported that a hung parliament was likely. This is now likely to plan out very much like the coalition situation in Germany. Forming a government may take weeks or months alternatively, fresh elections could be held to produce a more decisive result but there is no guarantee that this will be the case.

The week ahead Major data releases :

Monday

9 am – GBP – Services PMI
10 am – USD – ISM Non – Manufacturing PMI
7.30pm – AUD – Current account, retail sales & RBA statement

Tuesday

1.15pm – GBP – MPC member Haldane speaks
4.35pm – AUD – RBA gov Lowe speaks
7.30pm – AUD – GDP

Wednesday

8.15am – USD – ADP non-farm employment change
8.30am – CAD – Trade balance
10 am – CAD – BOC rate statement
10.30am – USD – Crude oil inventories
7.30pm – AUD – Trade balance

Thursday

7.45pm – EUR – Minimum bid rate
8.30am – EUR – ECB press conference
11 am – CAD – BOC Gov Polloz speaks
Anytime – JPY – BOJ policy rate & Press conference

Friday

4.30am – GBP – Manufacturing production
8.30am – CAD – Unemployment rate
8.30am – USD – Average earnings, unemployment rate.