- Scottish referendum, take II
- Oil’s slippery slope
- MPs vote on Brexit Bill
- Central bank week
Scottish First Minister Nicola Sturgeon has called for a second referendum on Scottish independence from the UK. The move was not unexpected as Sturgeon had long been clamoring for vote under the preface that circumstances are markedly different with Brexit moving forward. Scots largely voted to remain in the European Union in the Brexit vote.
While one might have expected this to be the icing on the cake for political risk in the UK, we’re seeing a surprisingly stronger pound as Brexit looks all but confirmed to proceed. The Brexit Bill is back in the House of Commons, and it brought a friend. The House of Lords has tacked on an amendment to the bill that will give Theresa May the authority to trigger Article 50 and negotiate Britain’s split with the EU. The House of Commons is expected to nix the amendment and pass it in a vote this evening.
After sliding more than 9% last week, WTI crude oil prices have dipped below $49 / barrel. US producers are ramping up production far more aggressively than many thought, filling the gap created by OPEC’s production cuts. Investors are questioning whether OPEC’s deal will be extended should US production continue to thwart their efforts to reduce the global supply glut. This has had little effect on USD/CAD which has been range bound through the morning.
We’ve a big week ahead for central banks. Markets have already priced in a 0.25% rate increase from the Fed on Wednesday, whereas the Bank of England and the Bank of Japan are expected to hold policy in their meetings Thursday. Aside from a departure from the expected moves, markets will be sifting through the meeting minutes for details on what to expect from policy-makers for the rest of the year.
EURUSD: Euro takes a step lower after ECB president Draghi’s speech gave no hints towards policy changes.
GBPUSD: Sterling is up this morning thanks to the Brexit Bill’s proximity to final confirmation in Parliament.
AUDUSD: Aussie dollar is stronger this morning after copper prices rose.
USDCAD: Canadian dollar is flat against the greenback despite the dip in oil prices.