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Trump vows ‘great’ post brexit trade deal with UK

Brexit Currency Global Market News

STERLING

Justine Greening, the former education secretary, has said the idea of a second referendum on Brexit would be supported by senior Tory MP’s. According to Greening, Prime Minister May’s Brexit whitepaper ‘’suits no one’’ and would be rejected by both remainers and leavers.

Brexit and the accompanying political uncertainty weighed on the pound last week while further losses were seen on Friday after Trump’s warning that Theresa May is killing the prospect of a US-UK trade deal.

GBP/USD fell to a near two-week low on Friday before finding support just above the 1.31 level and has inched higher this morning currently above 1.32 mid-market.

This week looks set to be a busy one for Sterling with labour market data due tomorrow, inflation on Wednesday and retail sales on Thursday.

US DOLLAR

The Dollar Index reclaimed the 95 handle on Friday although this proved short lived with weaker-than-expected import prices and Michigan Sentiment providing a weight.

The global reserve currency’s safe-haven appeal had provided support earlier in the week amid rising US-China trade tensions, as well as some slightly hawkish comments from Philly Fed President Harker and stronger PPI data.

On the data front, we await retail sales and Empire manufacturing later today, industrial production tomorrow and housing data Wednesday. Fed Chair Powell will also deliver his semi-annual monetary policy report to the Senate Banking Committee on Tuesday.

EURO

EUR/USD dropped to a two-week low on Friday at 1.1613 with analysts highlighting both re-positioning and some technical selling. The ECB minutes also leaned towards the dovish side although a hawkish ECB sources report provided some balance.

Euro Zone CPI figures are out on Wednesday and will likely be the main focus for investors on the data front.

JAPANESE YEN

The Japanese Yen finished Friday as one of the weakest G10 currencies as safe-haven assets struggled amid rising global equity markets. A dovish Bank of Japan sources story also provided a weight with USD/JPY reaching its best level since last October on Friday but has eased back slightly this morning to 112.50.

This week we look ahead to trade data on Thursday and CPI on Friday.

AUSTRALIAN DOLLAR

After flirting with the 0.7500 level early last week, the Australian Dollar pulled back to a one week low at 0.7360 on Thursday as rising global-trade tensions took hold. Losses were trimmed into the weekend however while the pair has kicked off this week little changed at 0.7425.

Looking ahead, the RBA minutes are out tomorrow ahead of Thursday’s labour market data.

CANDADIAN DOLLAR

Last week was a volatile one for the Canadian Dollar, or more specifically Wednesday where the it rallied on the Bank of Canada’s rate hike before falling back sharply on the plunge in oil prices. The pair touched a one-month low at 1.3064 on Wednesday before surging back above 1.32 and has begun this week around 1.3150.

Ahead, Friday’s CPI report will likely be the main focus for investors.

NEW ZEALAND DOLLAR

The New Zealand Dollar hit its lowest level in over a week on Friday at 0.6725 having taken a sharp turn lower on Friday on rising US-China trade tensions. Friday’s PMI miss also added to the downside pressure although we have seen a modest bid this morning.

SWEDISH KRONA

The Swedish Krone finished last week as one of the weakest G10 currencies following dovish Riksbank minutes and soft CPI data. Both EUR/SEK and USD/SEK hit their best levels in over a week on Friday although have eased back slightly this morning. We may well have a quiet week ahead with no notable data releases to note.

NORWEGIAN KRONE

After a bullish start to the week on stronger-than-expected CPI data, the Norwegian Krone faded into the weekend. EUR/NOK stopped just short of the 9.5 level on Friday, having touched its lowest level since last October on Tuesday at 9.3864.

 

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