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A mixed bag

Today’s news headlines:

‘Boris Johnson warns Britain to prepare for no-deal Brexit’. Brexit deadline number eight has expired, with expectations for a no deal. Boris Johnson said the current deal on offer isn't right for the UK, and that British businesses needed to be prepared for a hard Brexit in January. Johnson placed blame on French President Emmanuel Macron, who is insisting on rule equivalence, which would see the UK's mirror the EU's. Macron's suggested if this doesn't happen, the UK could face sanctions or other economic backlash. 

‘EU countries agree deal to end €1.8tn budget stand-off’. Following weeks of debate, EU members have finally agreed a €1.8tn budget, which includes a rule of law provision as a precondition to receive money from the €750bn recovery fund. The provision is likely to create hurdles for Hungary and Poland who have recently created political reforms many deem undemocratic and a slide towards authoritarianism. While the offending provision remains in place, a document was drafted that applied the rule only to future budgets and allows recourse to member states via the European Courts of Justice. (Financial Times)

Today's events, rates, and data 

  • Brexit negotiations have failed to produce a deal once again, although the market seems to be ignoring the risk of mass chaos in January. UK businesses are clearly not prepared for a no-deal Brexit because the government, who will set the rules of operation, have not seriously taken the time to plan for a no-deal outcome. The Pound remains relatively buoyant despite these concerns, only breaking through the 100-day moving average on the Pound Index in this morning’s session. The Dollar sell off has also been on pause for the week, but risk assets are ticking higher anyway due to good news out of the EU. Brent Crude is now trading above $50 per barrel this morning, having firmly broken the key level yesterday. All focus remains on Brexit negotiations which have been given yet another new deadline of January.

Today's events

EU German CPI m/m: -0.8% vs -0.8% last month
UK Bank of England’s Bailey speaking: 8:30am
EU Italian Industrial Production m/m: 9:00am
UK Consumer Inflation Expectations: 9:30am
CA Capacity Utilization Rate: 1:30pm
US PPI m/m: 1:30pm
US UoM Consumer Sentiment: 3:00pm
US UoM Inflation Expectations: 3:00pm

Interbank rates

GBP/USD: 1.3230
GBP/EUR: 1.0910
EUR/USD: 1.2110
USD/CAD: 1.2750

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