• The euro and sterling rose on Tuesday as Britain and the European Union agreed on a preliminary text for the nation to leave the economic bloc in a bid to avoid a chaotic divorce that would disrupt the region’s economy.
It is unclear whether British Prime Minister Theresa May could get the deal approved by Parliament, where hardline Brexit supporters accused her of surrendering to the EU. May’s Caand Leslie Adlerbinet will meet on Wednesday on the Brexit draft.
Sterling hit a 6-1/2-month peak versus the euro on the perceived progress toward a Brexit agreement. Sterling also reversed much of its loss on Monday against the dollar.
• Against the dollar, sterling was up 0.82 percent at $1.2955 following a nearly 1 percent drop on Monday.
• At 2:18 p.m. (1908 GMT), the euro was up 0.34 percent at $1.12570. It fell to $1.1216 on Monday, the lowest level since June 2017.
The euro’s gain was limited by concerns about Italy’s budget proposals and downbeat German investor sentiment data, traders said.
• The index that tracks the dollar versus the euro, sterling, yen and three other currencies was 0.15 percent lower at 97.397, easing below a 16-month high of 97.693 reached on Monday.
• Tuesday is the deadline for Italy, the euro zone’s third- biggest economy, to resubmit its 2019 budget plans to the EU. The European Commission rejected Italy’s plan last month and has threatened to impose penalties if it is not revised to conform with EU regulations - something Rome has indicated it is unwilling to do.
• The International Monetary Fund on Tuesday warned that the government’s stimulus plan would leave Italy vulnerable to higher interest rates that could ultimately plunge it into recession.
The tension between Rome and Brussels has raised fears about Italy’s membership in the euro zone.
• Britain struck a draft divorce deal with the European Union after more than a year of talks, thrusting Prime Minister Theresa May into a perilous battle over Brexit that could shape her country’s prosperity for generations to come.
While Brussels choreographs the first withdrawal of a sovereign state from the EU, May, a far from secure leader hemmed in by opponents in government and her own Conservative party, must now try to get the deal approved by her cabinet and, in the toughest test of all, by parliament.
Brexiteers in May’s party accused her of surrendering to the EU and said they would vote the deal down while the Northern Irish party which props up her minority government questioned whether she would be able to get parliamentary approval.
Britain’s main opposition Labour Party will vote against any Brexit agreement that does not meet its tests, and doubts that the deal will be good for the country, leader Jeremy Corbyn said on Tuesday.
• Consumers and the pharmaceuticals industry alike are anxious about medicine supplies, if there is no deal on Britain’s departure from the European Union.
• U.S. President Donald Trump’s top economic adviser said on Tuesday that the United States welcomed the resumption of talks with China on trade, while Vice President Mike Pence warned Beijing to change its behavior so as to avoid a new cold war with the United States.
• Another round of upheaval engulfed President Donald Trump’s White House on Tuesday, with the future of several senior aides in doubt just a week after U.S. congressional elections.
Three Trump cabinet members - Chief of Staff John Kelly, Homeland Security Secretary Kirstjen Nielsen and Interior Secretary Ryan Zinke - could soon be gone, said sources familiar with internal discussions in the Republican administration.
• President Donald Trump is expected to provide written answers to questions from the special counsel investigating Russian interference in the 2016 U.S. presidential election as soon as this week, a person familiar with the matter said on Tuesday.
The questions from Special Counsel Robert Mueller that Trump is preparing to answer relate only to Moscow’s involvement in the election, and not to whether Trump may have tried to obstruct the Russia investigation, the source told Reuters.
• Japan’s economy contracted more than expected in the third quarter, hit by natural disasters and a decline in exports, a worrying sign that trade protectionism is starting to take its toll on overseas demand.
The 1.2 percent annualized contraction in July-September was more than the median estimate for 1.0 percent growth in annual terms. It followed a robust3.0 percent annualized growth in the previous quarter.
• Oil’s slide accelerated on Tuesday, with U.S. futures suffering their steepest one-day loss in more than three years due to ongoing worries about weakening global demand and oversupply.
U.S. futures closed down 7.1 percent, for a record 12th straight decline and the lowest since November 2017. More than 980,000 contracts changed hands, as funds shed positions.
U.S. crude futures CLc1 settled down $4.24 a barrel, or 7.1 percent, to $55.69 a barrel. It was the largest one-day percentage decline for the contract since September 2015. U.S. crude has lost 28 percent since its early October peak.
Brent LCOc1 ended down $4.65, or 6.6 percent, to $65.47 a barrel, the largest one-day loss since July. Brent has lost 25 percent since peaking at a four-year high in early October. It now sits at levels not seen since March.
Reference: Reuters
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