Sterling remains the weakest major currency this week as pressured by uncertainties over Brexit. UK prime minister Theresa May blamed the fall in the Pound's exchange rate on media's misinterpretation of what she said yesterday. She clarified that "I am tempted to say that the people who are getting it wrong are those who print things saying I'm talking about a hard Brexit, it is absolutely inevitable it is a hard Brexit. I don't accept the terms soft and hard Brexit." She emphasized that "what we are doing is going to get an ambitious, good and best possible deal for the United Kingdom, in terms of trading with and operating within the European single market." Earlier in the day, May said in a televised interview that Brexit is about "getting the right relationship" and the right relationship is about being "have control of our borders, control of our laws".
German Chancellor Angle Merkel repeated her stance that without accepting EU's "four freedoms", there would be restricted access to the single markets. The four freedoms include movement of goods, people, services and capital over borders. Merkel emphasized that "one can't carry out these negotiations as an exercise in cherry-picking. That would have fatal consequences for the other 27 member states, and we can't allow such consequences." Meanwhile, Merkel also urged European unity beyond Brexit and said urged the member states to have "have joint positions on a range of issues, including trade, climate to domestic security." And without it, "Europe won't be able to develop its strength."
In US, Atlanta Fed president Dennis Lockhart said that "the job of cyclical recovery is largely done". And, Fed is "quite close to achieving its mandated policy objectives of full employment and stable prices." And, the economy is "well positioned for moderate growth and steadily improving conditions". Meanwhile, Boston Fed president Eric Rosengren said that "appropriate monetary policy will need to normalize more quickly than over the past year." And, Rosengren also said that it "seems reasonable if we continue to see real GDP growing faster than the so-called 'potential' rate."
On the data front, UK BRC retail sales monitor rose 1.0% yoy in December. Australia retail sales rose 0.2% mom in November. China CPI rose 2.1% yoy in December, PPI rose 5.5% yoy. Swiss will release unemployment rate in European session. Canada will release housing starts and building permits later in US session.