British Pound Cheering Resignation of Brexit Secretary Davis, USD Broadly Lower
The US dollar is trading as the weakest one, followed by the Japanese yen. The British pound is trading as the second strongest and markets seemed to be cheering the resignation of Brexit Minister David Davis. The euro continues to strengthen, as the latest US data and trade news developments kept pressure on the US dollar. European indices are also solid. The DAX is up 0.1%, CAC up 0.25%, FTSE up 0.27%.
Today's German trade data and Sentix report indicated that trade jitters had not yet had a notable negative impact on the Eurozone’s economic activity. Sentix Eurozone investor confidence report unexpectedly improved in July. The figure was expected to slide from 9.3 to 8.2, but instead jumped to 12.1. The German trade balance surplus narrowed slightly, from €20.1b to €19.7b, but the seasonally adjusted figure unexpectedly improved from €19.0b to €20.3b.
The UK is due to leave the European Union on 29 March 2019, but the two sides have yet to agree how trade will work between the UK and the EU afterwards. Brexit Minister David Davis’s resignation today was a shock to the markets. Davis said he could not remain in his post because he no longer believed in the plan for the UK's future relations with the EU which was backed by the cabinet on Friday. As it became known, Dominic Raab has been appointed Brexit secretary by Theresa May after David Davis resigned from the government.
BoJ Governor Haruhiko said in the meeting of the regional branch manager that “Japan’s economy is expected to continue expanding moderately.” But ultra-loose monetary policy would be maintained until inflation hits target. According to BoJ’s Regional Economy Report, the Japan’s economy had continued to recover moderately.
Data released today also showed, that Swiss unemployment rate dropped to 2.6% in June. China’s foreign currency reserves rose USD 1.5B in June to USD 3.1121T, up 0.05%. Japan current account surplus narrowed to JPY 1.85T in May. Bank lending rose 2.2% yoy in June.