News broke this afternoon that Prime Minister Theresa May is preparing to make a new Brexit offer to the EU regarding the Irish border issue, helping Sterling jump a cent against the US Dollar to 1.31. The government are reportedly willing to accept some checks in the Irish sea to achieve an agreement.
Last week GBP/USD just about managed to maintain 1.30, although came within a whisker on Friday after softer-than-expected GDP data took the pair to its lowest level in over two-weeks.
Construction PMI data is due tomorrow followed by the key service sector report is on Wednesday.
There was a mixed reaction to last week’s FOMC message as Fed Chair Powell delivered an upbeat assessment of the economic outlook, but policymakers predicted rate increases would end after 2020.
The Dollar Index picked up some momentum heading into the weekend reaching a three-week high at 95.37 on Friday before easing back on soft readings for Chicago PMI and Michigan Sentiment. The Index is trading around 95.2 this morning.
Looking ahead, manufacturing PMI and ISM are due later today while Fed Chair Powell speaks again tomorrow ahead of the jobs report on Friday.
The single currency finished Friday as one of the weakest G10 currencies, tracking heavy losses in Italian government bonds and stocks after the populist coalition agreed to a deficit-to-GDP target of 2.4% for next year.
EUR/USD hit its lowest level since September 12th on Friday at 1.1570 and has dipped slightly this morning after Euro Zone manufacturing PMI was revised to 53.2 from 53.3.
PPI data is due tomorrow while service PMI and retail sales follow on Wednesday.
The Japanese Yen was one of the weakest G10 currencies last week and has continued the trend this morning with USD/JPY rising to a fresh eleven-month high at 114.06. Dovish remarks from BoJ Kuroda after a fairly dull BoJ policy statement last week highlighted the divergence with the FOMC and provided a weight while soft Tankan data overnight did the same.
Household confidence data is out tomorrow, followed by wage data and the leading index on Friday.
The Swiss Franc finished Friday as one of the weakest G10 currencies and continued the trend this morning as USD/CHF edged up to a fresh five-week high at 0.9842. Domestic impulses have been limited which has driven speculation of possible SNB intervention while the positive start to the week for European equity markets will have provided a weight on the perceived safe-haven currency.
Friday’s CPI report is the sole data release.
Domestic impulses for the Australian Dollar were somewhat limited last week while a lack of progress in the US-China trade talks kept the Antipodean on the defensive. AUD/USD flirted with the 0.72 level on Friday and has crept lower this morning with investors looking ahead to tomorrow’s RBA policy decision where rates are widely expected to remain on hold.
Trade figures follow on Thursday and retail sales on Friday.
The Canadian Dollar has begun the trading week as the clear outperformer among the G10’s after they struck a trade deal with the US and Mexico over the weekend – USD/CAD dropped to its lowest level since May 23rd this morning at 1.2889.
RBC manufacturing PMI is out later today alongside possible comments from Bank of Canada Deputy Governor Lane. IVEY PMI follows on Wednesday ahead of trade and employment data on Friday.
NEW ZEALAND DOLLAR
The New Zealand Dollar initially rose on last week’s RBNZ policy statement as they noted early signs of a pickup in core inflation. This proved short lived however as they also maintained that they expect to keep the OCR on hold until 2020. A lack of progress in US-China trade talks continues to keep the pair depressed with NZD/USD nursing a small daily loss this morning at just above 0.66.
Looking ahead, NZEIR confidence data is out tomorrow.
The Swedish Krona has been relatively stable versus the Euro in recent trading sessions but has weakened versus the Dollar with USD/SEK touching a fresh two-week high thus morning at 8.9200. There was not much immediate reaction to news early last week that PM Lofven had been defeated in a confidence vote with investors instead looking towards the Riksbank for clue – Jansson did warn against moving too quickly ahead of the ECB.
PMI data released this morning also surprised to the downside and will have weighed.
The Norwegian Krone finished Friday as the stronger of the NOK/SEK pairing and built on that momentum this morning where we saw a fresh two-week high at 1.0945. Norwegian retail sales surprised to the upside on Friday and provided some support although manufacturing PMI was soft this morning.
Looking ahead, we await a quiet
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