Crucial week ahead for Brexit negotiations


Sterling has kicked off this week as the weakest G10 currency after an alarming lack of progress in Brexit negotiations over the weekend. Discussions have now been paused while both sides are said to have stepped up no-deal preparations which sent GBP/USD back below 1.31 to a low of 1.3082 this morning.

The troublesome Irish border issue hindered progress over the weekend with European leaders set to meet on Wednesday. A decision they will now make is to whether to commit to a November summit, assuming they are confident that Theresa May has moved negotiations along in keeping with their timetable.

Technically, 1.31 is the confluence of an important Fibonacci retracement line and a 100-day moving average, representing a key area of support.

Brexit related headlines will remain in focus but macro data could prove just as important this week with labour market figures tomorrow, inflation on Wednesday and retail sales on Thursday.


The Dollar Index dipped below 95 on Friday for the first time since September 28th following soft CPI and PPI reports released earlier in the week. The Dollar rose into the weekend after stronger readings for US import prices and Michigan Sentiment. Hawkish remarks from Chicago Fed President Evans may also have played their part.

The Dollar Index has lost some minor ground this morning to 95.2 as US government bond yields also edged lower.

Looking ahead, retail sales are out later today, industrial production tomorrow, housing data on Wednesday and Philly Fed on Thursday. The FOMC minutes are also out on Thursday.


EUR/USD made a brief appearance above 1.16 on Friday before falling back as ongoing Italian budget concerns weigh. Comments made by ECB President Mario Draghi on Friday may also have caught the eye as he did not repeat his recent comment regarding a vigorous pick up in underlying inflation.

Looking ahead, Euro Zone trade data and German ZEW are out tomorrow, Euro Zone CPI on Wednesday and current account on Friday.


The Japanese Yen rose versus the Greenback last week as it emerged the main beneficiary from the risk adverse trading. The theme has coyntinued this morning where USD/JPY hit a one-month low at 111.70 after heavy losses in Asian equity markets.

Trade figures are out on Thursday followed by CPI on Friday.


USD/CHF fell to a one-week low on Thursday at 0.9857 with analysts struggling to identify a catalysts for apparent weakness in the Swiss Franc. As is often the case in these situations, there has been talk of SNB intervention and we heard from President Jordan on Friday who said the situation in the currency markets remains fragile and pledged to intervene if necessary.

USD/CHF is flat this morning with little reaction shown to weaker-than-expected Swiss PPI data. Trade figures follow on Thursday.


The Australian Dollar touched its lowest level versus the Greenback since January 2016 last Monday but staged a modest recovery thereafter – AUD/USD hit a seven-session high on Friday at 0.7141. Stronger than expected Aussie data provided some support although home loans did disappoint on Friday.

Labour market data due on Thursday will be the main focus for investors this week although the RBA minutes will also be closely watched tomorrow.


The Canadian Dollar continued to pare back USMCA inspired gains last week before bottoming out at two-week low on Thursday where USD/CAD hit 1.3074. Housing data likely provided a weight with soft prints for housing starts and building permits mid-week.

Investors are now looking ahead to Friday’s CPI and retail sales data.


The New Zealand Dollar touched its lowest level versus the Greenback last Monday since January 2016 but did stage a modest recovery thereafter. NZD/USD hit an eight-session high on Friday at 0.6535 after some stronger data released earlier in the week include electronic card retail sales and the food price index.


The odds of a rate increase by the Riksbank in December rose last week, boosted by stronger-than-expected CPI data and remarks made by Deputy Governor Skingsley who said they are fairly near to the first rate hike.

USD/SEK plunged on Thursday and continued lower on Friday where we the pair printed a two-week low at 8.9377.

Unemployment figures are out on Thursday.


Stronger-than-expected inflation data boosted the Norwegian Krone last week; data released on Wednesday showed September CPI at +3.4% YoY (f/c. +3.2%). USD/NOK quickly broke below the 8.2 level and has edged down to a fresh two-week low this morning at 8.1816.

Trade figures were out this morning although prompted minimal reactions while industrial confidence data is due on Friday.

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