Last chance saloon for an orderly Brexit


The US economic data were not a great deal of help to the USD. Pending home sales fell 1.0% in February and were down by 4.9% from the same month last year. The annualized expansion for gross domestic product for the fourth quarter was marked down from 2.6% to 2.2%. Initial jobless claims were fewer than expected while continuing claims exceeded forecast.  Personal consumption expenditure increased by a quarterly 1.5%, unchanged from the previous estimate. The only number to beat forecast was the Kansas Fed's manufacturing index, which improved by 21 points to +17.

If the data did not help the USD, the president of the New York Fed did. At a speech in Puerto Rico John Williams played down the concerns of some investors that the negative yield curve means a recession is imminent. He said "the most likely case" was growth of 2% and the risk of recession is "not elevated". His comments probably helped investors to turn a blind eye to the data.


Consumer price index figures from Germany yesterday put inflation at 1.5% in March, down from 1.7% in February and below the forecast 1.6%. The equivalent numbers from France this morning delivered an inflation rate of 1.3%, also lower on the month and below expectations. Italian inflation was steady at 1.1%. Today's data from Germany surprised on the upside. A 0.9% monthly increase in retail sales overturned the predicted 0.9% decline and a 7k fall in unemployment took the jobless rate down from 5% to 4.9%.

Investors looked more carefully at slowing inflation than they did at German jobs and sales. It was not remotely close to the European Central Bank's target, making it yet more likely that EUR interest rates will not go up before next year. The euro is 0.3% lower on the day against the USD.


Oil prices are 50 cents higher on the day, a rise of 1%. The increase was moderately positive for the Canadian dollar, which almost managed to keep pace with the USD. It is a trifling 0.1% lower against the USD.

The only Canadian data to have been released this week were the trade figures on Wednesday. Today brings the industrial product and raw material price indices as well as the GDP reading for January.


Following the inconclusive indicative votes in parliament on Wednesday the GBP has not been in investors' good books. They see a disunited government becoming even more disjointed if the prime minister carries out her promise - or threat - to resign as long as parliament sings off her withdrawal agreement. The GBP is 0.9% lower against the USD.

MPs will have chance to do that this morning. At 10.30 ET they will vote for the third time on that withdrawal bill, though not on the political declaration that accompanied it the first two times around. On the face of it, Theresa May does not have the numbers to get it through the house. The 10 Democratic Unionist Party PMs have said they will vote against it. Success or failure will depend on how many people refuse to toe their party's instructions.


There was no shortage of Japanese statistics overnight. Consumer prices in Tokyo increased by 0.9% in the year to March, beating the forecast 0.5% rise. Stripped of the effect of fresh food, prices were up by 1.1% as expected. Unemployment in February was down from 2.5% to 2.3%.  Industrial production increased by 1.4% in February, though it was still 1.0% less than in the same month last year. Retail sales increased by a monthly 0.2%. Housing starts for the month were up by 4.2% on the year while construction orders fell 3.4%.

Investors seemed not to be bothered about any of those figures. There was no reaction from the JPY, which is 0.4% lower on the day, most of that move taking place during the New York session.

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