05/04/2017 - Hammond Expects Conflict At Home and Abroad

GBP

Chancellor of the Exchequer Philip Hammond said someone within the U.K.’s governing party will oppose reaching an agreement with the European Union as he gears up for conflict at home and abroad in the Brexit talks.

“There are definitely some people on both sides who do not want a deal, they do not want to see Britain continuing to collaborate in what the prime minister described in a letter as a deep and special partnership with the European Union,” Hammond said in an interview Tuesday in New Delhi. “I can tell you with a high degree of confidence that we will come up against tensions in this process.” 

The chancellor, who traveled with Bank of England Governor Mark Carney to promote British business, has sought to position himself as a voice of compromise in Prime Minister Theresa May’s government. Brexit supporters who demand a radical break with the EU have unnerved those who worry about the economic fallout of negotiations ending without a deal.  

USD

The U.S. trade deficit fell more than expected in February as exports increased to a two-year high and slowing domestic demand weighed on imports. The narrowing in the trade gap comes as the Trump administration is pushing ahead with its agenda for fair trade and bringing back manufacturing jobs to the United States as it seeks to boost economic growth.

The Commerce Department said on Tuesday the trade deficit declined 9.6 percent to $43.6 billion. January's trade shortfall was revised slightly down to $48.2 billion from $48.5 billion. The politically sensitive U.S.-China trade deficit dropped 26.6 percent to $23.0 billion in February.

When adjusted for inflation, the deficit decreased to $59.7 billion, with exports of goods the highest on record as an earlier drag from a strong dollar fades. The real trade deficit was $65.1 billion in January.

The decline in the U.S.-China trade deficit comes ahead of Chinese President Xi Jinping's visit later this week. President Donald Trump has declared China the "grand champions" of currency manipulation.

Key Announcements

09.30 – GBP – Services PMI; Forecast at 53.5 against a previous from 53.3

15.00 – USD – ISM Non-Manufacturing PMI; Forecast at 57.1 against previous of 57.6

15.30 – USD - Crude Oil Inventories

19.00 – USD – FOMC Meeting Minutes