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UK Prime Minister Theresa May wrote a formal letter to European Council President Donald Tusk, requesting Article 50 extension till June 20.

May said that she's already started talks with opposition leader to agree on a proposal for the Commons that allow an order Brexit. Invitation for discussion was also extended more broadly to other MPs to achieve a consensus. If no single unified approach is achieved, May's Government pledges to look to establish a small number of clear options on future relationship to be put the the House.

May said the steps "demonstrate that the Government is determined to bring this process to a resolution quickly". And, "the government will want to agree a timetable for ratification that allows the United Kingdom to withdraw from the European Union before 23 May 2019 and therefore cancel the European Parliament elections, but will continue to make responsible preparations to hold the elections should this not prove possible".

Here is May's letter:

Rates: US 10-yr yield retests lost support
US payrolls are expected to rebound following a dismal February figure. This week’s US eco data managed to ease global growth worries somewhat with the US 10-yr yield retesting previously lost support in the 2.5%-2.55% area. The German 10-yr yield returned into positive territory.

Currencies: Will payrolls give a clear enough signal for a directional USDD move?
EUR/USD reversed most of Wednesday’s rebound, but the 1.12 support still survived. EUR/USD and USD/JPY profit slightly from positive headlines on the China-US trade talks this morning. The focus for USD trading will be on the US payrolls. However, a big surprise is probably needed to pushed the dollar (EUR/USD) out of recent ranges

The Sunrise Headlines

• US equity markets gained mostly ground yesterday with technology shares underperforming (Nasdaq -0.05%). Asian equities are trading largely in green with modest gains. Bourses in China and Hong Kong are closed.
• The US and China reached consensus on the text of a trade deal, Chinese VP Liu He said. Chinese president Xi Jinping cited substantial progress, while US president Trump said a deal could be concluded within four weeks.
• UK PM May will continue negotiations with Labour’s Corbyn today after no agreement was found yesterday. They are facing growing opposition to the cross-party initiative, with a public vote on a deal as one of the talking points.
• US President Trump is to nominate Herman Cain for a position on the FED’s board of governors. Cain, a former contender for the Republican presidential nomination and ex-CEO of Godfather’s Pizza, is a friend of the president.
• US President Trump backs away from threats to immediately close the US border with Mexico to stop immigrant crossing, but instead raised the possibility to impose new tariffs on Mexican car import.
• Japanese real wages fell 1.1% in Feb. (Y/Y) with a downward revision of January to -0.7% (Y/Y), driven by lower bonuses. The result is a bit surprising giving the historic low unemployment rate and severe labour shortages.
• Today’s eco calendar contains US payrolls and earnings data for March. Canada prints labour data, while Germany prints the Industrial production for February. Fed’s Bostic speaks and EU finance ministers meet

Currencies: Will Payrolls Give A Clear Enough Signal For A Directional USDD Move?

Will payrolls give directional guidance for USD?

EUR/USD reversed most of Wednesday’s gain yesterday. The risk rally took a breather. German factory orders again declined sharply. EUR/USD started a gradual intraday slide. Later, jobless claims printed strong/low (202K), confirming a healthy labour market. US yields reversed an earlier dip. The combination of euro softness and a USD bid pushed EUR/USD to the low 1.12 area. The pair closed at 1.1221. USD/JPY stayed well bid and finished at 111.66. Overnight, Asian equities mostly show modest gains as US and China officials confirmed progress on the trade talks. At least for now there is no euphoria. USD/JPY (111.70 area) profits slightly from the tentative risk-on. At the same time, EUR/USD also gains marginally (1.1225 area). This morning, German production data might guide euro trading at the start of the session. However, the focus for global FX trading will be on the US payrolls. Late last week, markets were dominated by some kind of growth panic. This panic eased this week. In this context, a material deviation from consensus is probably needed for the payrolls to trigger an outspoken USD move. With the USD close to meaningful resistance levels (EUR/USD 1.12 support) , the USD reaction function might be slightly asymmetrical with the dollar a bit more sensitive to a negative surprise than to a positive one. Early this week, EUR/USD came close to the 1.1177/87 support, but a real test/break didn’t occur. The jury is still out, but this week’s price action suggests this support won’t give away that easily. For that to happen, unexpected additional negative EMU news or surprisingly strong US data are probably needed. Recent data evidence doesn’t support this scenario. A constructive risk sentiment/positive headlines on trade might be a euro supportive too. We keep the view that a sustained EUR/USD decline will not be that evident as we don’t expect the Fed to leave its wait-and-see bias anytime soon.

EUR/GBP hovered in the 0.85 big figure yesterday as investors await more news from the talks between officals of PM May’s party and the Labour opposition to try to find a way out of the Brexit impasse. This morning, EU’s Tusk was said to offer the UK a 12-month Brexit delay. Sterling is gaining modest ground. A long delay evidently avoids a hard Brexit, but probably won’t solve the political stalemate in the UK. We expect more technical trading in the EUR/GBP 0.85 big figure as the negotiations will most likely continue into the weekend.

EUR/USD: tentative signs of bottoming?

Pivot (invalidation): 5.5830

Our preference Long positions above 5.5830 with targets at 5.6310 & 5.6600 in extension.

Alternative scenario Below 5.5830 look for further downside with 5.5540 & 5.5270 as targets.

Comment The RSI is bullish and calls for further upside.

Pivot (invalidation): 0.7105

Our preference Long positions above 0.7105 with targets at 0.7130 & 0.7145 in extension.

Alternative scenario Below 0.7105 look for further downside with 0.7095 & 0.7085 as targets.

Comment The RSI calls for a new upleg.

Pivot (invalidation): 1.3340

Our preference Long positions above 1.3340 with targets at 1.3370 & 1.3395 in extension.

Alternative scenario Below 1.3340 look for further downside with 1.3315 & 1.3295 as targets.

Comment Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.

Pivot (invalidation): 0.9985

Our preference Long positions above 0.9985 with targets at 1.0010 & 1.0030 in extension.

Alternative scenario Below 0.9985 look for further downside with 0.9970 & 0.9950 as targets.

Comment The RSI advocates for further upside.

Pivot (invalidation): 111.50

Our preference Long positions above 111.50 with targets at 111.90 & 112.00 in extension.

Alternative scenario Below 111.50 look for further downside with 111.30 & 111.15 as targets.

Comment The RSI advocates for further upside.

Pivot (invalidation): 1.3115

Our preference Short positions below 1.3115 with targets at 1.3060 & 1.3025 in extension.

Alternative scenario Above 1.3115 look for further upside with 1.3150 & 1.3190 as targets.

Comment As Long as the resistance at 1.3115 is not surpassed, the risk of the break below 1.3060 remains high.

Pivot (invalidation): 1.1230

Our preference Short positions below 1.1230 with targets at 1.1205 & 1.1195 in extension.

Alternative scenario Above 1.1230 look for further upside with 1.1245 & 1.1255 as targets.

Comment The index currently faces a challenging resistance area at 1.1230.

Pivot (invalidation): 2869.00

Our preference Long positions above 2869.00 with targets at 2885.00 & 2891.25 in extension.

Alternative scenario Below 2869.00 look for further downside with 2859.25 & 2848.50 as targets.

Comment The RSI is mixed to bullish.