Market News & Analysis
FTSE rises despite spanner from the Speaker
Fiona Cincotta March 19, 2019 9:42 AM
Sterling finds even keel
With speculation swirling on whether John Bercow’s decision will make it more likely for Britain to end up in a hard Brexit situation at the end of March or if it will mean that Brussels will try and impose an extended delay on Brexit, the currency market is trying to find its feet. An initial plunge of 1% in sterling/dollar has since reverted into only a minor decline in sterling’s value against the dollar and the currency has steadied to trade in a similar range as on Monday.
Dollar slides ahead of Fed meeting
In contrast, the dollar is lower ahead of the start of the Federal Reserve’s two-day rate setting meeting Tuesday and is losing ground against the euro and the yen. Recent weaker US economic data has lowered the yields on 10-year Treasuries and has made the dollar less appealing to investors. US rate setters are widely expected to stick to their plans announced earlier this year of a much slower pace of rate increases, but given that since their last meeting the labour market showed some weakening while the housing market started overheating, it is possible that the Fed may go back on its plans for two more hikes this year.
Wall Street is already reflecting some of the rising caution about the state of the US economy with stock markets showing much smaller increases than earlier in the year. The expected resolution of the US China trade talks still has the potential to give US industrials a major jolt, but without it some of the spectacular gains in the second part of last year may become a thing of the past.
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