Foreign exchange market: Brexit could reschedule for July 2019

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Morning news on the trade balance of China released better than expectations, and recorded a surplus of 57,06 billion, however, has not led to a significant rally in the market. Although the November value of the trade balance was only of 44.71 billion, and accordingly, the December surplus is 10% higher than the previous value, the price of these records was the reduction of imports by -7,6%, which exceeded the decline in exports, which amounted to -4,4%.
Thus, despite data on the surplus, in reality, trading activity of China is systematically reduced, which is an indicator of a slowing economy against the background of a trade war with the United States.
Let me remind you that on January 22-25, the parties will meet to discuss mutual concessions to end the trading of conflict, but whether there will be agreement is unlikely. Most likely, the U.S. and China will be a long and careful “bargain” for better terms, and to the maximum use of allocated time within the 90-day “truce”, the term of which expires only on March 1.
Meanwhile in the US the current government shutdown was the longest in history, and Russian investors are enjoying a kind of sanction holidays that occur due to the fact that American legislators do not consider laws on sanctions during the shutdown. However, this does not prevent to go active battles around “RUSAL”, which then impose sanctions, then take them off, then threaten to change my mind.
Steven Mnuchin answered all questions American parliamentarians regarding the reasons for the lifting of sanctions, but the talks were called a “waste of time”, which is very unpleasant for the head of the U.S. Treasury, which managed to achieve, in fact, a translation of “RUSAL” under the control of the States, given the fact that in the framework of the agreements, half of the people on the Board of Directors of the company shall consist of representatives of the States and the UK.
In the currency market the key focus of investors this week will be confined to British pound (GBP) as the main intrigue of tomorrow is the vote in the British Parliament, the agreement reached by the team of the Prime Minister Theresa may and the EU. Previously, the vote was postponed because the Parliament was not ready to support the deal may. Did the British Prime Minister to persuade the Parliament – will know by end of tomorrow will, however, forecasts are still pessimistic.
If the deal is accepted, Britain expects “tough Brexit”, or out of the EU without saving your important business and trade relations. However, as the date draws near, speculation is growing about Brexit may be postponed to a later date in July. However, the short-term impact from the potential failure of the talks tomorrow at the Brexit, regardless of whether he moved Brexit or no promise extremely negative impact on the British currency. which can demonstrate the reduction to the mark 1,2700 in tandem with the dollar.
But the lack of confidence may that its deal with the EU support, it could again postpone the vote in Parliament, in this case, the markets will perceive the news positively, following the old saying “no news is good news”.
Olga Prokhorova,
“International financial center”