Brexit blues!

The euro has been finding it hard lately to sustain a move above $1.13 level against the dollar and this was the case again yesterday, with the single currency giving up early gains to trade back below this level (which is where it stands this morning). Sterling is a little weaker against the dollar after the UK government’s defeat in a vote in parliament last night, and continues to trade in and around 88p against the euro

Bond yields in the core markets nudged down yesterday, largely driven by the release of much weaker than consensus retail sales in the US. Meanwhile, Asian equities were weaker overnight amid some negative headlines around the US-China trade talks, which will spill over into European stocks this morning

PM May’s government was defeated in a motion that sought parliament’s re-approval to seek changes to the backstop, with the group of Tory “Hard Brexiteers” abstaining this time around having supported the government on this way forward a couple of week’s ago. The defeat is seen as largely symbolic though, and a government spokesperson has said discussions with the EU will continue ahead of the next round of “fireworks” in parliament on 27th February

Retail sales in the US fell by more than 1% in December (from November), a much weaker outturn than the consensus expected. It’s hard to believe this is the start of a period of sustained softness in spending, given that incomes are still rising strongly on the back of on-going employment and wage gains

GDP growth in the Euro area was confirmed at 0.2% (q-o-q) in the final quarter of 2018, with the year-on-year rate of growth of 1.2% the weakest in 5 years. Employment continued to rise at the end of last year though, increasing by 0.3% from the third quarter

Data due today includes retail sales in the UK and consumer confidence and industrial production in the US