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Today’s news headlines:
‘Johnson to go to Brussels in search of way out of Brexit stalemate’. Boris Johnson will hold face-to-face Brexit talks with Ursula von der Leyen in Brussels today, amid continuing deadlock in the negotiations. Chief negotiators have prepared an overview of the remaining differences to be discussed in person, which include fisheries, level playing field on competition and governance of any trade deal. Previously, the Office for Budget Responsibility has cautioned that leaving the EU without a free trade agreement would result in a 2%–£40bn–hit on the UK economy along with 300,000 more job losses. (Financial Times)
‘UK will break ranks with EU and halt US tariffs over state subsidies’. The UK government is angling for a post-Brexit trade deal with officials in Washington by suspending punitive tariffs against the US over aircraft subsidies. Britain has broken ranks with the EU, which hit $4bn of US products with tariffs of up to 25% last month after a 16-year battle over subsidies, one of the longest running trade disputes. The move by UK Trade Secretary, Liz Truss, will be seen as an attempt to garner favour with incoming President Joe Biden’s new economic team. (Financial Times)
Today's events, rates, and data
The US Dollar slipped overnight against most of its major trading partners as vaccine optimism resulted in reduced demand for safe-haven assets. The Pound remains susceptible to large swings in either direction on Brexit headlines, with traders and investors contributing to increased implied volatility over tenors ranging up to one-month.
German Trade Balance: 18.2B vs 17.8B previously
Bank of Canada Rate Statement: 3.00pm
Bank of Canada Overnight Rate: 3.00pm
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