Sterling Stabilizes Slightly Despite Growing Brexit Uncertainty

Market Reviews

On currency markets, New Zealand dollar and Australian dollar are trading as the strongest ones today, but upside impulse is unconvincing. Japanese yen and US dollar remain the weakest ones. Euro is trading stable. The British pound is also relatively steady, despite growing Brexit uncertainty.

On stock markets, US shares closed mixed overnight. DOW closed down 0.22% at 24370.24. S&P 500 fell 0.04% to 2636.78. But NASDAQ closed up 0.16% at 7031.83. In Asia, Nikkei added 1.96%, Hong Kong HSI gained 1.54%, China Shanghai SSE increased 0.20%, Singapore Strait Times added 0.88%.

10-year yield increased by 0.023 to 2.879. But yield curve flattened at the long end with 30 year yield closed flat at 3.129. Also, 3-year yield (2.763) and 5-year yield (2.743) remains inverted.

UK Prime Minister Theresa May’s EU tour had no success. She made little progress convincing lawmakers in Brussels to amend the terms of her Brexit deal, increasing the prospect of another referendum, or an extension of Article 50, which was triggered in March last year, setting into motion Britain's departure from the European Union.

After the meeting with May, European Council president Donald Tusk tweeted that “Clear that EU27 wants to help. The question is how.” Meanwhile, former UK Prime Minister John Major urged the current government to revoke Brexit notice to the EU now. He said, “We need to revoke article 50 with immediate effect. The clock, for the moment, must be stopped.”

It was reported, that China has agreed to cut tariffs on US-built cars and auto parts to 15% from the current 40%, setting the stage for new talks aimed at easing the bitter trade war between the world's two largest economies.

US President Donald Trump said on Tuesday he would intervene with the US Justice Department in the case against a Chinese telecommunications executive if it would help secure a trade deal with Beijing. Trump said that he could intervene in the Huawei case if it’s good for the trade deal. He said “If I think it’s good for the country, if I think it’s good for what will be certainly the largest trade deal ever made – which is a very important thing – what’s good for national security – I would certainly intervene if I thought it was necessary.”

Today’s data showed, that Australia Westpac consumer sentiment rose 0.1% to 104.4 in December, up from 104.3. Japan domestic CGPI rose 2.3% yoy in November, below expectation of 2.4% yoy. Machine orders rose 7.6% mom in October, below expectation of 10.2% mom.