August 23, 2018 / 7:30 AM / 3 months ago

Daily Briefing: UK offers advice on no-deal Brexit

LONDON (Reuters) - Britain will publish today the first in a series of notes advising people and companies how to protect themselves from the potential disruption of a no-deal exit from European Union.

A man tries on a Union Jack themed jacket at a souvenir stall in London, August 22, 2018

More than 80 technical notices are expected over the coming weeks, with much curiosity about the level of detail that increasingly worried businesses can expect. Brexit minister Dominic Raab describes the notes as containing “sensible, measured and proportionate” guidance.

Critics predict they will amount to nothing more than “duck and cover” advice that will be wholly inadequate for the massive economic fallout they expect.

Angela Merkel sets off today for a three-day tour of the Caucasus, the main focus of which will be her weekend talks in Azerbaijan about the development of a southern pipeline to deliver gas to Europe from the Caspian.

Under onslaught from Donald Trump for not weaning Germany off Russian gas supplies, Merkel will use the trip to show she is searching for alternatives - but she will also remain committed to the Nord Stream 2 pipeline due to carry gas directly from Russia to Germany.

Separately, the Handelsblatt newspaper has a report that Merkel is more intent on securing the European Commission presidency for a German candidate rather than backing Bundesbank chief Jens Weidmann to succeed Mario Draghi at the European Central Bank.

If true, that would push the ECB’s most hawkish policymaker out of the running and have possibly far-reaching policy implications just as the bank starts to wind down its stimulus programme.

MARKETS AT 0655 GMT

The U.S. dollar rebounded on Thursday after its longest losing streak of the year, putting pressure back on emerging-market currencies as mid-level trade talks between China and the United States failed to stop the latest tit-for-tat tariffs on each other’s goods taking effect.

U.S President Donald Trump’s political woes remained top of the news agenda but failed to inject a clear direction into Wall Street stocks and bonds overnight, with the S&P500 backing off record highs as it marked the milestone of becoming the longest bull market in history.

U.S. 10-year Treasury yields hovered just above their July trough, with the two- to 10-year yield curve – seen by many as signal of a pending downturn - grinding lower to 11-year lows of 21 basis points. U.S. stock futures were little changed in early Thursday trade.

Emboldened by U.S. Federal Reserve policy meeting minutes that signalled steady monetary tightening ahead and before Fed chief Jerome Powell’s Jackson Hole speech on Friday, the dollar’s rally shone a light back onto many vulnerable emerging markets.

South Africa’s rand stood out with overnight losses of 1.5 percent after Trump tweeted late on Wednesday that he would ask his Secretary of State to look closely at changes to land reform laws proposed by the ruling African National Congress.

Russia’s rouble also continued to push lower after its weakest close against the dollar since 2016 on Wednesday, unnerved by the latest wave of U.S. sanctions against Russian entities.

Australia’s dollar tumbled more than half a percent after Australian Prime Minister Malcolm Turnbull's leadership was called into question following the resignation of three senior ministers.

U.S. President Donald Trump departs after awarding a Medal of Honor posthumously to Air Force Technical Sergeant John A. Chapman in the East Room at the White House in Washington, August 22, 2018

Euro/dollar retreated from $1.16, meantime, ahead of European Central Bank meeting minutes later on Thursday. Sterling also backed away from $1.29 as the UK government prepared its advice to British companies and households about how to prepare for a no-deal Brexit.

In Asia trading, regional bourses were mostly positive, with Hong Kong stocks underperforming. European stock futures were lower ahead of the bell, with eyes on August flash PMI business surveys from across the bloc out during the day.   

— A look at the day ahead from European Economics and Politics Editor Mark John and EMEA markets editor Mike Dolan. The views expressed are their own —   

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