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Tusk comments prompt anger from Brexiteers

By Jake Trask

Yesterday saw the Brexit divisions between the UK and EU laid bare ahead of Theresa May's arrival in Brussels today with an angry outburst from EU Council President, Donald Tusk. At the end of a joint press conference with Irish Taoiseach, Leo Varadkar, Tusk in an obviously premeditated move commented "What that special place in hell looks like for those who promoted Brexit, without even a sketch of a plan how to carry it out safely". As the pair posed for photos, Varadker was heard commenting that Tusk would get “terrible trouble” from the British press which prompted both to laugh. The comments have prompted anger from leave voting MPs at home including arch-Brexiteer, Jacob Rees-Mogg who tweeted “Mr Tusk is hardly in the Aquinas class as a theologian and he seems to have forgotten the commandment about not bearing false witness.” It seems unlikely Mays visit is going to get anything done today and we are likely heading to the wire before we get an agreement or an extension to Article 50 if we aren’t to drop out of the EU on the 29th March on WTO terms. Despite the hostility, GBP/USD remained unmoved on the back of Tusks aggression holding steady during the afternoon. This morning it’s taken a dip lower however, possibly on the likelihood of more Brexit warnings due to be issued by Bank of England Governor, Mark Carney who is due to give a press conference to accompany the latest interest rate decision and quarterly Inflation Report. GBP/USD is currently hovering around 1.29.

The dollar has started Thursday on the front foot with many stock markets around the world trading in the red. It’s been a relatively quiet 24 hours since President Trump gave his delayed State of the Union address in Washington with only a town hall from Fed Chairman Jerome Powell the one event of note. Powell didn’t mention monetary policy at the q and a session with invited teachers from around the country so it seems likely the dollar is benefitting from moves out of other currencies such as the Aussie and Kiwi. The quiet theme to the week continues today and tomorrow with only speeches from FOMC members Richard Clarida and James Bullard likely to make headlines. EUR/USD is around 1.1355 with USD/JPY at 110.

As mentioned throughout the week there is little happening in the Eurozone at present with no top tier data due until next week’s German and EZ Q4 GDP numbers. Today sees the latest growth and inflation forecasts issued by the European Commission which will likely paint a gloomier picture of the bloc compared to its last health check in Autumn 2018. GBP/EUR trades at 1.1370.

The Aussie has been on a downward trajectory since dovish comments were made by Reserve Bank of Australia Governor, Philip Lowe on Tuesday night. The Governor opened the door to a rate cut from the bank highlighting the stimulating effect a lower Aussie would have in a speech to the National Press Club in Sydney. After trading as high as .7260 earlier in the week AUD/USD is now back under .71 as markets continue to sell the local buck. GBP/AUD sits at 1.8180.

A soft Ivey PMI from Canada yesterday has aided a slip in the Canadian dollar throughout the past 24 hours. The survey of 175 purchasing managers came in at 54.7 a steep fall from last month’s 59.7 and below the 56.4 estimate. USD/CAD is at 1.3240 with GBP/CAD at 1.7090.

The Kiwi dollar has dropped overnight as the latest employment figures from New Zealand came in under-par. The unemployment rate ticked up further than expected to 4.3% from a revised 4% with the accompanying Employment Change number also missing target. NZD/USD has reversed all the gains seen over the past couple of weeks falling back down to the .6750 level. GBP/NZD is at 1.9110.