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A light Calendar Leaves Brexit and the GBP in the Spotlight

Earlier in the Day:

Economic data released through the Asian session was on the lighter side this morning. Current account figures out of Japan were the only stats to consider in the early hours. Later in the day, Japanese consumer confidence figures will provide further direction following disappointing household spending figures from Friday. Overnight, loan growth figures out of China were released ahead of the Asian open.

For the Japanese Yen,

According to figures released by the Ministry of Finance, the current account surplus widened from ¥600.4tn to ¥2.677tn in February. Forecasts were for a widening to ¥2.679tn.

The Japanese Yen moved from ¥111.714 to ¥111.666 against the U.S Dollar upon release of the figures. At the time of writing,  the Japanese Yen up by 0.30% to ¥111.39 against the U.S Dollar.

Elsewhere,

At the time of writing, the Aussie Dollar was down 0.21% to $0.7090, while the Kiwi Dollar was down 0.01% to $0.6729 for the session. In spite of continued optimism over a trade deal, the Aussie Dollar was under pressure as expectations of a rate cut weighed early on.

New loans figures out of China failed to impress in March. New loans stood at 885.8bn, which came in short of a forecasted 1,200bn. The size of new loans was in line with February figures. The rate of outstanding loan growth held steady at 13.4% year-on-year, however, which was in line with forecasts.

In the equity markets, it was mixed in the early part of the day. The Nikkei was down 0.23%, with the CSI300 also in the red, down by 0.09%. The ASX200 looked set to recover some of Friday’s losses. At the time of writing, the ASX200 was up by 0.52%.

The Day Ahead:

For the EUR

Following some negative stats out of Germany last week, focus shifts to February trade data due out later this morning.

Forecasts are for Germany’s trade surplus to narrow from €18.5bn to €18.0bn. Barring particularly dire numbers, we would expect the EUR to show little reaction to today’s figures.

Outside of the numbers, updates on both Brexit and U.S – China trade talks will also influence. With the ECB policy decision and press conference on Wednesday, there’s unlikely to be too much upside for the EUR, however.

At the time of writing, the EUR was up 0.12% at $1.1230.

For the Pound

There are no material stats scheduled for release through the day. The focus will remain on Brexit, with the EU’s 10th April deadline now just days away.

With time running out, all eyes will be on the House of Lords, which is due to vote on the Cooper Bill that was rushed through Parliament.

While the House of Lords passing of the Bill is a must, Theresa May could deliver Parliament with a deal to vote on. How much wriggle room the British PM has remains to be seen. Any deviation from the script would need EU agreement…

Over the weekend, Theresa May looked to fend off another Tory party rebellion over her reach out to opposition party leader Corbyn. The early part of the day could give some indications as to whether Theresa May was successful. There seems to be little point in trying to get support from the opposition party only to lose more support from within.

At the time of writing, the Pound was up 0.23% to $1.3068.

Across the Pond

It’s a quiet day ahead on the economic calendar. February factory orders, due out of the U.S, will provide the Dollar with direction later this afternoon.

Forecasts are for factory orders to fall in February, which would be aligned with the downward trend in new orders reflected in the manufacturing PMI surveys. According to the market’s preferred ISM survey, the New Orders Index fell by 2.7% in February, before recovering to 57.4 in March (+1.9%).

Outside of the numbers, market risk sentiment will provide direction for the Dollar ahead of the numbers. While trade negotiations continue to be a key driver, Brexit will also influence appetite for U.S Treasuries on the day.

At the time of writing, the Dollar Spot Index was down by 0.14% to 97.258.

For the Loonie

Economic data due out later today is limited to February building permit and March housing start figures. The numbers are unlikely to have a material impact on the Loonie as the markets look ahead to this week’s monthly OPEC and IEA reports.

While crude oil prices will provide some direction to the Loonie, any upside remains limited. The Bank of Canada’s dovish stance on monetary policy will likely continue to weigh on the Loonie near-term.

The Loonie was down 0.04% at C$1.3378, against the U.S Dollar, at the time of writing.

This article was originally posted on FX Empire

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