TALKING POINTS – EURO, POUND, BREXIT, ITALY, US DOLLAR, CANADIAN DOLLAR
- British Pound drops as UK PM May struggles for Brexit plan help
- Euro down earlier than Italy vs EU conflict, Sweden votes on new authorities
- US Dollar could also be joined by Yen, Franc on the upside in risk-off commerce
The Canadian Dollar outperformed in Asia Pacific commerce, in transfer seemingly linked to a spirited recovery in crude oil prices. That adopted from OPEC+ feedback over the weekend hinting that the cartel and its allies might cut back output in 2019.
The US Dollar likewise rose, deftly pivoting from Friday’s haven demand-driven rally to a renewed deal with the Fed charge hike prospects. A recovery in risk appetite buoyed Treasury yields whereas the priced-in charge hike outlook implied in Fed Funds futures steepened.
Meanwhile, the British Pound slumped as progress on Brexit negotiations continued to disappoint. UK Prime Minister Theresa May is struggling to persuade the cupboard to again her technique for nation’s post-separation relationship with the EU, with additional resignations hinted after Friday’s departure of Jo Johnson.
EU POLITICS WEIGH ON EURO, POUND AND BROAD MARKET MOOD
A boring providing on the European information docket is more likely to maintain sentiment traits in focus from right here. S&P 500 futures proceed to level greater forward of the opening bell on Wall Street however conviction appears to be ebbing as worries about several concurrent EU-based flashpoints preoccupy buyers.
Beyond the Brexit stalemate, Italy on the right track to collide with regional bloc authorities about its funds and Sweden remains to be struggling to supply a authorities after months of fruitless haggling following inconclusive elections. A Moderate-led minority authorities will probably be pitched to parliament later this week.
Against this backdrop, the Euro is rapidly rising as the second-worst performing foreign money on the day after Sterling. The unfold between German and Italian bond yields has tellingly widened, reflecting the rising danger that markets see related to lending to Rome versus Berlin.
The Greenback appears to have taken the shifting market temper in stride but once more, discovering renewed help from safety-seeking capital flows. If the pendulum swings to a risk-off setting in earnest, it’ll most likely be joined on the upside by the perennially anti-risk Japanese Yen and regional haven Swiss Franc.
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ASIA PACIFIC TRADING SESSION
EUROPEAN TRADING SESSION
** All occasions listed in GMT. See the full economic calendar here.
FX TRADING RESOURCES
— Written by Ilya Spivak, Currency Strategist for DailyFX.com
To contact Ilya, use the feedback part under or @IlyaSpivak on Twitter