Summary:
- UK parliament to vote on no-deal Brexit today
- Drop in Boeing’s orders may weigh on durable goods print
- API hinted at decent drop in the US crude stockpiles
Revamped Brexit deal was rejected yesterday barely making situation any more clear. The UK lawmakers will vote on what to do next today and tomorrow therefore volatility is likely here to stay for some time, at least when it comes to the UK assets. Apart from that, semi-important readings from the US will be released in the early afternoon followed by DOE print on oil inventories 2 hours later.
Vote on no-deal Brexit (evening, probably around 7:00 pm GMT)
In line with expectations the UK parliament rejected revised Brexit deal yesterday evening. Scale of defeat was smaller than during the first vote on 15 January but a difference of almost 150 between numbers of backers and opposers gives Theresa May little reasons to cheer. The parliament will decide today whether to leave the European Union without a deal or not. It is widely anticipated that no-deal Brexit will be put off the table today, a move that would pave the way for extending Article 50. Theresa May pledged to do whatever parliament decides therefore should the UK lawmakers back no-deal exit from EU, a significant pressure on the GBP may surface.
12:30 pm GMT - US, Durable goods orders for January and PPI inflation for February. A pack of semi-important readings from the US economy will be released in the early afternoon. Headline PPI inflation reading is expected to show a minor deceleration from 2% YoY to 1.9% YoY. The durable goods data comes in with a slight delay due to the US government shutdown. It is said that the reading may be weak as Boeing’s orders dropped significantly between December 2018 and January 2019. Headline measure is expected to show a 0.5% MoM drop.
2:30 pm GMT - DOE report on oil inventories. Oil price managed to push reasonably higher this week thanks to reports of Saudi Arabia wanting to implement deeper output cuts in April. Moreover, just recently rumours surfaced saying that Saudis may ask other OPEC members to extend agreement into second half of 2019. Any confirmation could send crude prices reasonably higher. Last but not least, yesterday’s API report signalled a drop of 2.8 million barrels in the US inventories. In case this is confirmed by today’s DOE print bulls may get even more reasons to cheer.
Central bank speakers scheduled for today:
- 5:00 pm GMT - ECB’s Coeure
GBPJPY is one of the FX pairs most responsive to the Brexit turmoil. Just recently (on Monday) the pair managed to bounce higher off the 200-session moving average (purple line) but yesterday’s developments erased part of this gain. Rejection of no-deal Brexit option in today’s vote could be seen as relief for GBP and the UK economy but one needs to be aware that in case lawmakers back motion to leave EU without a deal a significant downward move may occur. Source: xStation5
