Brexit was a dominating theme on the markets last week after Theresa May lost crucial vote in the parliament. The topic is likely to stay in the spotlight for some time as the Prime Minister is about to outline new solution today. Elsewhere, investors will focus on Mario Draghi post-meeting conference as well as the release of PMI indices from the United States and Europe.
Theresa May presents Brexit “Plan B” (Monday)
The UK Prime Minister suffered a tremendous defeat last Monday when the UK parliament voted 432-202 against her Brexit deal. The Prime Minister was given time until Monday to develop “Plan B” and then present it to the public. As the House leader already scheduled vote on the new solution for 29 January the parliament will have more or less a week to assess whether new plan will be better than the previous one. Parliamentary opposition said that it will back new deal only if May completely rules out the possibility of the no-deal Brexit. In response Theresa May said that she cannot make such an assurance. As there are less than 70 days remaining until scheduled Brexit date and still nothing is certain one may expect vivid discussion to be held on the matter during the week. Affected markets: GBPUSD, UK100.
ECB meeting (Thursday, 12:45 pm GMT - decision, 1:30 pm GMT - conference)
Federal Reserve took an opportunity during its latest meeting and signalled that the monetary tightening process is likely to slow or even pause. The latest range of data from the euro area was weak to say the least. PMIs continue to move lower, growth in Germany in 2018 plunged to the lowest pace since 2013 and recent industrial production numbers do not bode well for the EMU either. Such a combination does not herald any hawkish moves to be made in the nearby future. Moreover, it will be the first meeting after the Bank decided to halt net asset purchase programme therefore any remarks on how this work out will be more than desired. Affected markets: EURUSD, DE30.
PMI indices from the United States and Europe (Thursday)
This week will be a bit short for the US traders as stock exchanges in this country will remain shut on Monday for Martin Luther King Day. Nevertheless, the second part of the week will be interesting due to the release of the preliminary PMI data for January. Note that in the previous month PMIs were quite accurate predictor of the market direction. The ongoing government shutdown causes a bulk of hard data releases to be postponed therefore surveys like PMIs may be a crucial piece of a puzzle in trying to assess the state of the US economy. Affected markets: US500, TNOTE.