Euro takes out 1.2100 (FXE)
Stocks flat
Nikkei 0.03% Dax -0.56%
UST 10Y 0.93 (SPTL)
Oil $44 (OIL)
Gold $1838/oz. (GLD)
BTCUSD $19401/oz. (BITCOMP)

Asia and the EU
UK PMI Svc. 47.6 vs. 45.8
EUR Retail Sales 1.55 vs. 0.7%

US
USD Weekly Jobless Claims 8:30
USD ISM Non-Manufacturing 10:00

Equity markets were flat but held near record highs while the euro continued to power higher breaking the 1.2100 barrier as momentum flows continued to lift the single currency.

There was little fresh newsflow in overnight trade with Brexit talks still at standstill and the French threatening to veto any deal that would give up too much on fishery rights. While fish appear to be the main negotiating sticking point they are less than immaterial in the greater scheme of things and the far, far greater risk here is that the UK financial industry will be boxed out of the EU market.

Finance is the UK’s greatest economic growth generator and if the UK cannot have unfettered access to the continent its economy will suffer a devastating blow. Meanwhile European companies are eager to retain access to UK deep derivative markets and it is for this reason that markets continue to shrug off the doom and gloom talk from the diplomats. That’s why cable remains bid, trading back through the 1.3400 figure on broad dollar weakness.

The greenback is now at multi-year lows against its G-10 counterparts – a development that should be welcome news to EM nations that have a significant amount of debt denominated in dollars. As for the Europeans who may be starting to feel the pain of higher currency, the recent big moves have not yet elicited any strong pushback comments from monetary officials. Generally the Germans, who are the biggest exporters in the world have been able to absorb the adverse currency moves far better than imagined due to the superior engineering of the products. Still, if the pair takes out the 1.2200 level and more importantly holds it for several months, officials are sure to start voicing concerns, but for now the path of least resistance for the pair remains up.

In North America today the focus will be on ISM Non- Manufacturing data and especially the employment component of the report which tends to give a good preview of tomorrow’s NFPs.
Yesterday’s ADP was a disappointment, but the downbeat news was overshadowed by renewed optimism over stimulus talks. Still if the data misses and stimulus enthusiasm wanes, equities could see a perfect set up for sell off as the day proceeds.