GBP It was an extremely volatile session for sterling yesterday, which fell sharply early in the morning after news emerged that the EU's Brexit Chief negotiator said negotiations were in a deadlock on basic issues such as the divorce bill and EU citizens' rights. However, the currency rallied steeply later in the day as the EU announced that it will begin to discuss trade negotiations with the UK. Donald Tusk sent a draft to the 27 states of the EU saying that free trade talks could open in December, depending on the Prime Minister's offer of what the UK pays when it leaves the union. No data is expected today, but recent momentum could continue to send sterling higher.
EUR The single currency retreated yesterday from this week's highs as investors were focused elsewhere amid a lack of data in the euro area. The ECB's President Mario Draghi participated yesterday in a panel discussion about monetary policy at the Peterson Institute for International Economics, in Washington DC. Draghi did not give any new information, but emphasized that keeping rates at historic lows well past the beginning of QE tapering, is very important for markets to anchor interest rate and inflation expectations. No data will be released today.
USD The dollar gained against most of the G10 currencies, lifting the dollar index DXY some 0.13%. The US core Producer Price Index, which excludes volatile instruments such as food and fuel, climbed 0.4% month-on-month, double estimates, and putting the year-on-year rate at 2.2%. Today's consumer price index and retail sales will be closely watched after the Federal Open Market Committee minutes showed various officials remain concerned with the current pace of inflation. CPI and retail sales data will be released at 13.30 BST.
CAD The CAD fell across yesterday's session but has resumed its upward trend versus the dollar this morning supported by crude oil inventories yesterday. No data will be released today but markets appear to be taking positions for the Bank of Canada meeting taking place in two weeks.
BBC: Brexit: EU 'to prepare' for future trade talks with UK. The EU is to begin preparing for its post-Brexit trade negotiations with the UK, while refusing to discuss the matter with the British government. An internal draft document seen by the BBC suggests the 27 European Union countries should discuss trade among themselves while officials in Brussels prepare the details. The draft text could yet be revised. The draft paper submitted to the 27 EU states by European Council president Donald Tusk, suggests free trade talks could open in December - should Prime Minister Theresa May improve her offer on what the UK pays when it leaves. The BBC's Europe correspondent Adam Fleming said the paper has been described as an 'opening to the UK' to encourage the government to reach a deal with the EU.
FT: Theresa May forced to delay flagship EU withdrawal bill. Timetable slips in face of a planned rebellion by pro-European Tory MPs. Theresa May has been forced to delay the introduction of her flagship EU withdrawal bill in the face of a planned rebellion by pro-European Tory MPs who are working intensively across party lines to rewrite the legislation. The bill had been expected to return to the floor of the House of Commons next week for the start of eight days of detailed scrutiny, but that timetable has slipped as the prime minister's team try to head off multiple rebellions. Andrea Leadsom, leader of the House of Commons, said on Thursday that 'some 300 amendments and 54 new clauses have been proposed' by MPs who had 'concerns about the bill'.
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