(04 APRIL 2019)DAILY MARKET BRIEF 1:Market lull won’t last

(04 APRIL 2019)DAILY MARKET BRIEF 1:Market lull won’t last

4 April 2019, 13:35
Jiming Huang

Financial markets are rather quiet this morning. The FX market remains under the influence of both Sino-American trade talks and Brexit while the drop in German February manufacturing orders has also a significant impact on the European stock market. According to latest news, it appears that US President Donald Trump and Chinese Vice Premier Liu He are expected to meet today in order to put final conclusions on the negotiated trade deal ahead of the long-awaited Trump-Xi meeting that is assumed to be announced today.

Indeed, it seems that the US has finally tempered its tone as the enforcement mechanism is supposed to provide China with a more realistic deadline (around 2025) for implementing the necessary structural reforms the US claims, thus adding optimism in the marketplace. Interestingly, the British pound gains traction this week against the greenback (wee-to-date: +1.06%), although risk of a hard Brexit is rising. The short-term deadline provided by the EU at 12 April did not provide the expected outcome, as UK MPs voted down PM May’s Withdrawal Agreement for a third time and the House of Commons second attempt to agree on an alternative to May’s brexit deal failed. Yet the recent request made by the UK parliament to request May negotiating an additional extension period to Brussels will most probably not bode well as any alternatives suggested by the EU to the House of commons will be not be convincing for most MPs. We therefore remain very careful on the outcome as EU Parliament elections of 23 May will be at the centre of attention – and whether the UK is willing to take part of it (and contribute to EU budget as well) might be a game changer on whether the extension process (most likely a longer extension) will work.. or if a hard Brexit should take place instead.

Currently trading at 1.3150, GBP/USD is heading along 1.3120 short-term.

By Vincent Mivelaz

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