Dollar Flat Before Fed Meeting, US-China Trade Talk & Brexit Plan B on Spot

Daily Update - 29th January 2019

Yesterday’s Market

• EUR ECB President Draghi’s Speech
• GBP BoE Governor Carney’s Speech

Yesterday’s Explained

The American currency extended its decline against its European rival this Monday, unable to benefit from dominant risk aversion amid speculation that the FED will also pause in shrinking its balance sheet. The Euro rose to 1.1443, little affected by ECB's head, Draghi, testimony before the European Parliament, as he repeated the usual caveats about economic developments in the Union.  The macroeconomic calendar offered nothing of interest.

The U.S. economy was expected to lose $3 billion US from the partial federal government shutdown over President Donald Trump's demand for border wall funding, congressional researchers said on Monday, as 800,000 federal employees returned to work after a 35-day unpaid furlough. Trump said he would be willing to shut down the government again if lawmakers do not reach a deal he finds acceptable on border security.

Once again, there was a lot of noise around Brexit, The UK is running against the clock to clinch a Brexit deal, with the UK Parliament scheduled to meet again this Tuesday, to discover a series of amendments proposed by lawmakers, in an attempt to reach a satisfactory deal. There's a chance, however, that both parts EU & UK will return to the dealing table if the UK government and lawmakers agree on a counter-proposal, something quite unlikely given that there's no such thing as a plan B yet.

Today’s Market

• GBP UK Parliamentary Vote on Brexit Plan B

Today’s Focus

For the EUR, it’s yet a relatively quiet day on the data front, with key stats scheduled for release through the day being limited to consumer confidence numbers out of France and unemployment figures out of Spain. While we would expect the EUR to show some reaction to the consumer confidence numbers, market risk sentiment and outlook towards Wednesday’s FED interest rate decision and outlook on the rate path and the U.S economy remains key.

For the Pound, it’s another quiet day on the data front. With no material stats scheduled for release through the day, the focus will be on Parliament and the Plan B vote. There’s a lot going on ahead of today’s vote, with the prospects of the British PM having to face an unmalleable EU high going into today’s vote. It’s all about the backstop and there’s the prospect of an extension to the transition period.

Across the Pond, economic data scheduled for release through the day include November trade figures, house price data, and January consumer confidence numbers. The proof will be in the pudding later today, with the government shutdown likely to have weighed on consumer confidence at the start of the year. Outside of the numbers, we can expect chatter from the Oval Office and Capitol Hill to also play a hand in the Dollar’s moves through the day.