FOREX: USD, Stocks Edge Lower Into London Close

• US EIA: CRUDE OIL STOCKS EX SPR +2.55M TO 442.3M APR 04 WK
• US EIA: DISTILLATE STOCKS -3.54M TO 111.1M IN APR 04 WK
• US EIA: GASOLINE STOCKS -1.6M TO 236.0M IN APR 04 WK
• US EIA: CUSHING STOCKS +0.68M TO 25.8M BARRELS IN APR 04 WK
• US EIA: SPR +0.28M TO 396.7M BARRELS IN APR 04 WK
• US EIA: REFINERY UTILIZATION WEEK CHANGE +0.7% TO 86.7% IN APR 04 WK

• G10 FX continues to be dominated by the significant swings for the higher beta ccys such as AUD and NZD, as the low yielders continue to benefit from safe haven demand. While today’s greenback weakness has been broad based, GBP underperformance is standing out, with cable currently unchanged on the session at 1.2765.
• UK PM Starmer's attempts to reassure markets that the UK's fiscal rules are "iron clad and here to stay" appear to have been unsuccessful, with a renewed downtick in US Treasury futures keeping the pressure on UK paper (30-year yields now up 19bps). We recently wrote with the UK unlikely to meaningfully push back against US measures – this could add to the case for GBP underperformance through tariff uncertainty.
• Weakness for GBPJPY and GBPCHF has been substantial, and in the process EURGBP has stealthily risen to the highest level since January 2024, printing a session high of 0.8663. Clearance of the 0.8474 hurdle late last week highlighted an important technical breach and strengthens a bullish condition for the cross. Having breached 0.8645 resistance, attention will turn to 0.8768, the November 2023 high.
• While a modest move, it is worth noting that Rabobank have adjusted their EURGBP forecasts higher and now see the currency pair at 0.85 on a 6m vs. a prior forecast of 0.83. Monthly UK GDP and its subcomponents for February are due for release on Friday.

Spiegel reporting that the rank-and-file membership of the centre-left Social Democrats (SPD) will be able to vote on the programme for gov't from 0800CET on 15 April, with the ballot closing two weeks later at 2359CET  on 29 April. The governing agreement (here in German) reached with the conservative Christian Democratic Union (CDU) and its Bavarian sister party the Christian Social Union (CSU) comes 45 days after the 23 Feb federal election. 

• 7 May is seen as the most likely day for CDU leader Freidrich Merz to be formally elected chancellor by the Bundestag. If this proves the case, the 73 days between election and a new gov't coming to power would match the timeframe after the 2021 federal election, where Olaf Scholz was elected leader of a three-party 'traffic light' coalition.
• The last time SPD grassroots members were asked to approve a governing programme (after the 2017 federal election), it was supported by 66% of those voting, to 34% opposed - ushering in Angela Merkel's final gov't.
• Rejection by SPD members is unlikely, but could seriously dent sentiment towards Germany as the parties would be forced back to the negotiating table (unless the SPD takes the drastic action of ignoring its members votes)
• Spiegel also reports on the initial atmopshere around possible divisions: "Merz says the coalition agreement was formulated "on the basis of broad consensus" and that there is no hidden dissent. They have learned from the constant public dispute during the failed "traffic light" coalition..."