Brexit Mess Continues & Relief Keeps the Euro Afloat

Daily Update – 26th March 2019

Yesterday’s Market

• EUR IFO Expectations, EUR IFO Business Climate

Yesterday Explained

Market sentiments generally stabilized yesterday after initial selloff in Asia. While major European indices are still in red, losses are so far very limited. German 10-year bund yield even managed to turn positive briefly. Better than expected German Ifo Business Climate gave sentiment a mild lift. Yet, the picture isn’t cleared as manufacturing sector remained weak. 

As for data, the German IFO survey showed that the Business Climate Index rose to 99.6 in March from an upwardly revised 98.7 in the previous month. The Current Assessment improved to 103.8 while Expectations surged to 95.6, all of them beating the market's consensus. The US released the Chicago Fed National Activity Index which came in at-0.29 in February, while January's figure was upwardly revised to -0.25 from -0.47, and the Dallas Fed Manufacturing Business Index for March, which printed 8.3, better than the 7.0 expected.  The pair retreated ahead of the close amid the absence of a bullish catalyst and a heavy Pound.

Today's Market

• USD Housing Price Index
• EUR GFK Consumer Confidence

Today’s Focus

For the EUR, it’s a busier day ahead on the economic calendar. Germany consumer sentiment figures will provide direction for the EUR early on. For the Pound, it’s another quiet day on the economic calendar. Mortgage approvals are due out this morning, which will unlikely have a material influence on the Pound. The market focus will remain on Brexit chatter through the day. Overnight, Parliament voted in favor of taking control of the Brexit process. The focus will now shift to Wednesday. Expect volatility in the Pound to continue ahead of the Wednesday session, however. There is a possibility of a parliamentary vote on Theresa May’s deal if she can rally the rebels but it may come at a price.

It’s a busy day ahead for the Greenback. Economic data due out of the U.S this afternoon includes February housing sector data and March consumer confidence figures. The key driver this afternoon will be March consumer confidence figures. Anything in line with, or better than forecast, will be Dollar positive and also positive for Treasury yields.