22 Sep 2017

Market Brief: In a refreshing change, the beautiful city of Florence will hold the markets’ gaze today although it will be on a very familiar theme – Brexit.

Kevin Musisi

Dealing team

Today's data release
  Key levels
09:30 UK public sector finances   Support Resistance
13:30 US jobless claims 1.3450 1.3660
13:30 Philadelphia Fed manufacturing 1.230 1.1400
14:30 ECB's Draghi speaks    
Market overview

The Prime Minister, Theresa May, is set to deliver a speech aimed at invigorating Brexit negotiations by providing clarity on the UK’s offer on key issues. In particular, May is expected to vow to strengthen legal protections for EU citizens living in the UK with May’s aides reportedly having told EU diplomats to expect a proposal to ensure UK courts enforce the rights of EU citizens. On the Brexit bill, the PM is not expected to put a precise figure on her opening offer (€20 billion has been widely touted in the media this week), but British officials have been briefing EU capitals that Britain will ensure that there is no hole in the EU budget in 2019 and 2020. The speech is also likely do away with the mantra that no deal is better than a bad deal and focus increasingly on transitional arrangements, seeking to strike a more positive tone for talks. The speech is, of course, not only important for progressing (or not) the Brexit talks, but also in shaping May’s future and credibility going forward and particularly ahead of the Tory party conference at the start of October. Whether May’s speech succeeds on either of these fronts remains to be seen, particularly when some on the Brussels side of the negotiations look to be seeking a much bigger financial settlement.

With May taking centre stage today, after receiving the baton midweek from Janet Yellen, Angela Merkel is set to run the final leg this weekend with Germany’s federal election due on Sunday. As things stand, a renewed Grand Coalition or a coalition between Merkel’s CDU/CSU and the liberals (FDP) appear to be the most likely scenarios. However given the usual margin for errors, and elections of late no longer forgone conclusions, Sunday could throw up some surprises which could no doubt impact the Euro.

Further afield, tensions in the Korean peninsula escalated once again as North Korea struck back at U.S. President Donald Trump’s threats to destroy it. Kim Jong-un warned of the "highest level of hard-line countermeasure in history” and his foreign minister suggesting that could include testing a hydrogen bomb in the Pacific Ocean. U.S. President Trump ordered new sanctions on individuals, companies and banks doing business with North Korea as he sought to further isolate the regime and increase economic pressure for it to curb its weapons programs.

Thought of the day

The UK has led the way as we now have the first supermarket in the world to allow shoppers to pay for groceries using just the veins in their fingertips! Customers at the Costcutter store at Brunel University in London are the early adopters. The firm behind the technology, Sthaler, is in talks with other UK supermarkets to adopt the high-tech finger vein scanners. The scanners work by using infrared technology to identify people by their finger veins, this then links via a unique biometric map to their bank details stored with payment provider Worldpay. According to Sthaler, vein technology is the most secure method as it cannot be copied of stolen. FX markets can sometimes feel like “finger in the air” thinking at times with so many factors effecting the market, at Investec we use a Treasury Roadmap to analyse your exposures and help detect your risks. To schedule your own FX Deep Dive please contact your Investec Dealing team on 0800 055 6339.

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