U.K.to Trigger Article 50
Centrist Candidate Emmanuel Macron struck the first blow in the run up to the French Presidential Election last evening.
In most commentator’s minds, Macron the popular centrist candidate won the first televised debate between the three leading candidates.
He accused the right-wing candidate of trying to divide the French. This comment was well received but surely unless you expect to receive every vote, any candidate will divide the population. Still whoever let a decent soundbite be ruined by reason?
The more telling statistic which emerged overnight is the fact that 40% of the electorate have yet to make their minds up about who they will support.
The Euro firmed against a dollar which is still suffering from the Post-FOMC blues. Although there is still strong selling interest on any approach to 1.0800, a break of that resistance could quickly lead to 1.1000.
Citibank yesterday abandoned their “house view” that the Euro would trade below parity in the next six months, raising their expectation to, a hardly earth shattering, 1.0400.
An announcement yesterday morning from a Downing Street Spokesman fired the starting pistol for Brexit. Article 50 of the Lisbon Treaty will be triggered next Wednesday. Prime Minister Theresa May will write to the President of the European Union to confirm that the U.K. intends to leave the E.U.
Sterling, predictably fell, closing 0.40% down on the day. A strong level of support has built up between 1.2180 and 1.2220 but this level was never likely to be tested. Ample liquidity ensured that the fall was relatively shallow.
Today’s release of Producer Prices and Inflation data will have a far greater effect on the currency and will be an interesting postscript to last week’s MPC meeting which will probably have had access to “flash” previews of the data.
There will be speeches by no less than nine members of the FOMC this week. One of those speaking will be the Fed. Chair Janet Yellen. She was preceded yesterday by Chicago Fed. President Charles who confirmed the “three-hike” strategy and disappointed traders by confirming that the Fed won’t accelerate the pace of rate rises. Looking purely at the data, the Fed is hiking at just about the correct pace.