After mounting speculation yesterday around Gary Cohn’s position in Donald Trump’s government, the US President’s top economic advisor resigned last night. Markets have been rattled by the news as the influential Mr Cohn had been one of the more globalist members of the Trump administration and had been reportedly trying to persuade the President to drop his tariffs threat. Concerns over the potential for a trade war had been receding after Trump’s proposed aluminium and steel tariffs ran into heavy domestic opposition. We have now seen a negative market reaction to the risk of protectionism rising, in addition to concerns over the high staff turnover within administration following the departure of Communications Director Hope Hicks and with National Security Advisor H.R. McMaster reportedly considering his position. Overnight, the Nikkei shed 0.8% and the dollar surrendered around 0.5% against the yen to ¥105.65. Futures markets point to US markets opening lower, with the S&P 500 projected to fall 0.7% when trading resumes.

Whilst there are still a few more seats left to assign, information published by the Interior Ministry now gives us a fairly clearly picture of the new composition of the new Italian Parliament, which is set to convene for the first time on 23rd March. 316 of the 630 seats are needed for a majority in the lower house and of those allocated, 5* has won 221 seats, the centre-right coalition (Lega Nord, Forza Italia, Brothers of Italy and others) 260 seats and the centre-Left led by the incumbent Democratic Party (PD) 112 seats. 23 seats are still be to be confirmed. Looking forward, President Sergio Mattarella is set to hold informal talks with the party leaders in the coming days, which may give some clue as to which direction negotiations may take.

It seems as though Theresa May’s plans to make sure of London’s place as Europe’s financial services capital after Brexit will be publicly rebuffed by EU leaders today even as her Chancellor, Philip Hammond, looks to deliver a speech arguing the merits of a Brexit deal for the UK financial sector. Theresa May on Friday hinted that Britain would seek a deal based on the mutual recognition of UK and EU regulatory regimes, but this has so far been met by dismissive comments from Brussels and other EU leaders. Both Donald Tusk, the European Council President, and Bruno Le Maire, France’s finance minister, look set to say that financial services cannot be included in a deal due to Mrs May’s so-called “red lines”.

In global news, North Korea appears to have signalled a willingness to engage in talks with the US about embarking on a denuclearisation program. Apparently marking a breakthrough in the crisis, Pyongyang said that it was open to negotiations and would suspend its controversial testing regime while talks were under way. The message was delivered through South Korean officials after meeting with Kim Jong Un and marked a significant change for the North Korean leader. 

The day ahead

Away from data, the main event today will be Philip Hammond’s speech (12:15pm) and the corresponding replies from Donald Tusk and Le Maire. Final GDP data from the Euro area for the fourth quarter will be released this morning and there will be focus on ADP employment data from the US. ADP figures are usually taken somewhat as an indicator of the important Non-farm Payroll figure which follows on Friday afternoon. The NFP figure will be even more closely watched this week as the Fed are expected to raise rates at their next meeting in a couple of weeks and this is a key data point for them.

As we come to the end of quite a winter I’m slowly allowing myself to think about walking along a sandy beach on a nice summer’s day. Tonya Illman and Grace Ricciardo were doing just that in Western Australia when they discovered a message in a bottle which dates back 131 years – the world’s oldest message of this type. When they got home they put the note in an oven to dry it out before unravelling it to reveal a set of coordinates and a date of 12 June 1886. It’s a remarkable find but to ensure you don’t have to send out a distress message in relation to your currency needs, give the Dealing Desk a call on 0800 055 6339 to discuss your strategy.