Good morning,

USD: Dollar strength clipped

The conservative political action conference took place on Saturday, and Donald Trump was once again complaining about the strength of the Dollar and the subsequent impact it was having on the US economy. There was an element of renewed tension between Trump and Powell, who bore the brunt of his frustration about interest rates.

On better news, the Wall Street Journal posted an article yesterday suggesting that the US-China deal is close to being concluded. This deal would include the lifting of US tariffs on 200 billion dollars’ worth of Chinese goods. China has responded by offering lower tariffs on a variety of US goods, including farming produce, chemicals and auto imports. The next meeting pencilled in should see Trump and Xi meeting around mid-March.

GBP: Suspended in the middle

There isn’t a huge amount to report on today, as we only have Markit Construction data from February due out at 09:30. Figures are expected to drop down from 52.6 in January to 52.0. With the disappointing UK construction PMI reading from Friday, another poor print today wouldn’t be surprising as both construction PMI and manufacturing PMI have found themselves trending together.

There were a few comments made on Friday evening by Barnier that are worth adding to the notebook. If an extension if to be offered, then the EU27 will need to know precisely what it is for – it cannot be used to defer a problem. The extension will need to be signed off by a unanimous decision before or on March 21st.

The ERG has made another pledge to Conservative party politicians to ensure that they back Theresa May’s revised deal, or risk remaining in the EU for good.

GBP pairs will remain twitchy, with perhaps limited further upside while we wait for confirmation about the direction of the Brexit negotiations.

Have a great day.