European Majors Remain Steady, Awaiting More Clarity About Brexit Deal
On currency markets, Swiss franc is trading as the strongest one. British pound and US dollar are the second and third strongest. Still, pound’s upside impulse is unconvincing. Yesterday, the pound was lifted by news that UK and EU agreed on the declaration on future relationship, but the boost is so far limited. On Thursday, the British pound jumped more than 1% following the news.
The euro was also trading higher today, boosted by news that Britain and the European Union agreed a draft text setting out their future relationship before a summit on Sunday. Meanwhile, Australian dollar is the worst performing one for the week, followed by New Zealand dollar and then Canadian dollar.
In the minutes for the October meeting released yesterday, the European Central Bank acknowledged “uncertainties and fragilities” in the economy. The October meeting concluded that “the incoming data, while somewhat weaker than expected, remained overall consistent with an ongoing broad-based expansion”. The ECB policymakers noted that risks to the economic outlook is skewed to the downside as driven by the uncertainties related to global trade. Yet, it reiterated the incoming data had not been able to derail Eurozone’s strength.
The World Trade Organisation (WTO) said in its monitoring report released yesterday, that countries belonging to the Group of 20 (G-20) of the world's biggest economies applied 40 new trade restrictive measures between mid-May and mid-October, covering around US$481 billion (S$660 billion) of trade.
Bank of England’s Michael Saunders said in a speech that assumption of a smooth Brexit adjustment is itself uncertain and any such resolution of Brexit uncertainties may change the economic outlook, perhaps substantially. More importantly, the monetary policy implications of different Brexit outcomes could go either way, depending on the effects on supply, demand and the exchange rate.