Good morning,

CNH: Welcome back

With China returning following a week’s holiday for the Lunar New Year celebrations, focus falls back on the trade talks between the US and China. Resuming today in Beijing, representatives from both countries are set to meet in Beijing. March 1st remains a deadline that, if missed, would see an extension and amplification of trade tariffs on Chinese goods into the US and a likely retaliation from the Chinese as well. Any increase in trade taxes, hiking costs for consumers and pressuring margins for manufacturers and producers is a negative for both the participants’ economies and, given the size of the players, the global growth story as a whole.

The yuan was relatively quiet through the past week but is down this morning by the most in one day since October.

GBP: A poor end to a volatile year

Brexit votes on additional amendments to the government’s withdrawal arrangement are due this Thursday and although we now have fewer than 50 days until the UK is set to leave the European Union, with or without a deal, there is a fundamental lack of progress. Brexit Secretary Barclay will meet with EU Negotiatior Barnier today in Brussels to once again try to extract some wriggle room in the backstop arrangements.

Today’s sterling focus is the first reading of UK GDP for the last quarter of 2018. Last year’s GDP readouts were all over the place; Q1 was hampered by the ‘Beast from the East’ and while Q2 was relatively stable, Q3 was a story of a heatwave and a World Cup team performance that both seemed improbable at the beginning of the year. Q4 is set to show a slowing into the end of the year with Brexit uncertainty starting to weigh. Consumers will still have spent money and it will be the trade and investment components that show just how reticent businesses were to overextend themselves in the last months of 2018.

UK GDP is due out at 09.30.

USD: Heading towards another shutdown

Get ready for further chatter on another shutdown. A deal on US governmental funding broke down over the weekend and needs to be rescued by Friday or parts of the US government will once again close, hurting the US economy once again.

How much this will affect the USD remains to be seen although the dollar is in a good position given the strength of the growth picture locally compared to elsewhere in the world and the desire for investors to hold the greenback should noises from the global economy become more negative.

Have a great day.