The overnight Brexit deal rhetoric prompted a bullish opening gap in the Cable, as the pound bounced to 2-week highs to near 1.3050 level vs. the greenback. The opening jump was quickly reversed and the spot gave up the 1.30 handle on fresh conflicting Brexit headlines that cited a Brexit deal is far from certain, as the uncertainty around the Irish border issue still looms.
Amongst other majors, the Antipodeans slipped on disappointing Chinese services PMI release and risk-off trades on the Asian equities. Meanwhile, the USD/JPY traded modestly flat around the 113.25 level, as the Yen was undermined by the BoJ’s Governor Kuroda’s comments on the monetary policy and inflation outlook. The EUR/USD treaded cautiously below the 1.14 handle, as the focus now shifts towards the US mid-term elections due tomorrow.
On the commodities front, both crude benchmarks traded on the back foot, in spite of the US sanctions on Iran officially kicking-off today. Gold prices on Comex were little changed near USD 1235 while copper futures on Comex dropped -1.21% to 2.780 on China growth concerns amid a skepticism over the US-China trade deal.
Main Topics in Asia
BoJ Meeting Minutes see limited focus on September's meeting
UK's PM May odds of Irish border deal "50-50" - The Guardian
Brexit deal is far from certain - The Irish Times
China's Caixin services PMI drops sharply to 50.8 in October, 13-month lows
China's Xi pledges to open market to the world
BoJ’s Kuroda: BoJ will seek to exit accommodative policy if inflation reaches 2%
Asian stocks drop on concerns US and China may not reach a quick trade deal
BoJ's Kuroda: No change in central bank's stance to achieve the 2% price target
Key Focus Ahead
We are heading into a relatively light EUR macro calendar, with the UK services PMI dropping in at 0930 GMT and expected to arrive at 53.3 in October vs. 53.9 last. At the same time, the Eurozone Sentix investor confidence data is due, which is expected to show a dip in the investors' morale for the month of November amid the European political woes and weaker fundamentals.
The NA session also appears quiet, as only the US ISM non-manufacturing PMI report will be closely eyed amid a lack of relevant news from Canada. Also, the Bank of Canada (BoC) Governor Poloz’s comments will remain in focus, as he is due to speak about the financial markets and implications for monetary policy at the Canada-UK Chamber of Commerce, in London.
However, the macro releases will play a second fiddle to the Brexit-related headlines and US mid-term elections anxiety, which will remain the main market drivers in the coming days.
EUR/USD: Trapped in a falling wedge ahead of the US midterm elections
A Republican victory in both houses, however, could mean more fiscal stimulus, in which case a falling wedge breakout may remain a distant dream. The caution ahead of the midterm elections will likely keep the EUR/USD flatlined today.
GBP/USD weakening from 1.3000 as Brexit headlines fail to keep bulls on track
Brexit headlines continue to drive false hope in the GBP/USD, sparking half-hearted bull runs. The UK services PMI Monday could showcase growing signs of an economic slowdown across both continents.
US Congressional election update – Uncertainty is the winner
The Congressional election has had a volatile trajectory this year. Six weeks ago the Democrats looked to ride the historical advantage for the party out of the White House in non-Presidential elections to a sweeping victory in the House with a takeover in the Senate a distinct possibility.
RBA to stick on rates, but maintain positive outlook - TD Securities
According to analysts at TD Securities, The Reserve Bank of Australia (RBA) is more than likely to remain unmoved on interest rates for the time being.
Will the US Mid-Term Elections Boost Gold?
“We invite you to read our today’s article about the upcoming US Mid-Term Elections and find out what are the likely consequences for the gold market.”
Fed to signal gradual rate hikes on Thursday, get long EURUSD
Rather than making any immediate policy changes, the Fed will likely use the meeting to discuss the size and composition its balance sheet should have after the normalization is completed.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays below 1.1100, looks to post weekly losses
EUR/USD continues to trade in a narrow range below 1.1100 and remains on track to end the week in negative territory. Earlier in the day, monthly PCE inflation data from the US came in line with the market expectation, failing to trigger a reaction.
GBP/USD struggles to find a foothold, trades near 1.3150
GBP/USD stays on the back foot and trades in negative territory at around 1.3150 on Friday. The US Dollar holds its ground following the July PCE inflation data and doesn't allow the pair to stage a rebound heading into the weekend.
Gold retreats toward $2,500 ahead of the weekend
Gold stays under modest bearish pressure and declines toward $2,500 in the American session on Friday. The 10-year US Treasury bond yield edges higher toward 3.9% after US PCE inflation data, causing XAU/USD to stretch lower.
Week ahead – Investors brace for NFP amid Fed rate cut speculation
Here comes another NFP week, with investors eagerly awaiting the results as they try to discern the size and pace of the Fed’s forthcoming rate cuts. The weaker than expected July numbers triggered market turbulence, instilling fears about a potential recession in the US.
Easing Eurozone inflation to back an ECB rate cut in September Premium
Eurostat will publish the preliminary estimate of the August Eurozone Harmonized Index of Consumer Prices on Friday, and the anticipated outcome will back up the case for another European Central Bank interest rate cut when policymakers meet in September.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.