The pound stabilised in Asian trading this morning, but we expect more volatility given the uncertain political situation in the UK regarding Brexit and over the question of whether PM May will be forced to resigned. So far PM May has wowed to stay, but several Conservatives have called for her resignation and the DUP may pull its support. Moves in the Asian equity markets this morning have been mixed on the back of the Brexit uncertainty and the trade spat between the US and China. The focus is on whether China and the US can come to an agreement before the G20 meeting later this month. The Japanese equity markets declined, while China's equities gained.
In the US, there have been a couple of speeches by the two regional Federal Reserve presidents (Atlanta and Minneapolis) that urged some caution in raising rates given the weaker growth abroad. Furthermore, the Federal Reserve has announced that next year it will review how it pursues maximum employment and stable prices. Short term, this should not have much impact on markets, but look for more on this in 2019.
All eyes are on the Brexit developments and the future of Theresa May as UK prime minister. Developments took a sharp turn yesterday as the Conservatives went into open warfare when several ministers in Theresa May's government resigned including Brexit minister Raab. On the data front the day is fairly quiet with US manufacturing production being the main release. ISM manufacturing and yesterday's Philadelphia Fed survey point to somewhat softer manufacturing growth in recent months. Final euro inflation for October is also due today.