The British pound is the key story in G7 and its rally isn’t so convincing as to matter much. So, we are likely to sink back to watching equities and paying attention to ISM report today for growth guidance in the U.S., writes Bob Savage, CEO of Track Research Monday.

Perhaps we should call April 2 no Fools’ Day. We are into 2Q and the pain and suffering for money managers in 1Q makes everyone cautious and look for answers even when there are none.

When there is little liquidity or news and markets move, you can’t fool anyone with an explanation. The British pound (GBP/USD) has rallied today and its outperformance has no new cause. We can always blame Brexit and that is how it worked again today.

The Japanese yen (USD/JPY) hasn’t moved even with a weaker Tankan and that also begs logic, but we can blame politics.

Forecasts for Q2 are interesting to consider today as they are a road map into unknown territory with GBP consensus forecast 1.42 for June while JPY is 108. What is clear is that these stories overnight are the consensus explanations for the present volatility and worth watching for the week ahead.

You can’t know where you are going if you don’t know how you got to where you are now.

1) South Korean won (USD/KRW) breaks 1060 – trades at 3-year highs. Xi’s special envoy Yang Jiechi told President Moon to expect “visible accomplishments” in bilateral economic issues, South Korean presidential spokesman Kim Eui-kyeom said.

2) JPY choppy but not stronger. Support rating for PM Abe’s cabinet improved to 42.4% up 3.7pps from mid-March. Risk for Abe losing September LDP presidential election drops.

3) Chinese yuan (CNY/USD) lower despite stronger fixing. China tariffs on the U.S. go into action today. Penalties range from 25% on American pork and eight other kinds of goods to 15% on fruit and 120 types of commodities, the ministry said.

4) GBP higher leads G7. Angela Merkel’s closest ally in the EU’s Brexit apparatus has said the transition period could be extended if Britain needs more time to prepare for leaving the EU. Elsewhere a report from the FT suggested that UK PM May plans a customs partnership for Northern Ireland, although trade experts warned that the proposed scheme is challenging and would take years to implement.

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