Daily Market UpdateOctober 15, 2019
EUR/USD ranged from the high 1.09’s to the mid 1.10’s overnight. The pair is trading at fresh weekly lows around 1.1000, as the dollar continues recovering ground, although at a modest pace. The pair fell so far to 1.0994, in spite of better-than-anticipated European data, as the German ZEW survey came in at -22.8 for the country at -23.5 for the EU in October, still well into negative ground. Speculative interest maintains the cautious stance, with equities trading mixed and not far away from their opening levels, and government debt yields retreating modestly ahead of auctions. The US session is bringing little of relevance, a couple of Fed’s speakers and the September Monthly Budget Statement.
Fresh optimism regarding Brexit talks has been boosting GBP/USD after a bout of pessimism allowed profit-taking on Monday. And now, a surge above 1.27 is in sight.
Positive political reports are sending GBP/USD higher. Cable dropped on Monday as the wind was blowing to the other direction – pessimism about reaching a deal this week. Barnier said that fresh “political impulse” is needed – and perhaps it has come now.
Brexit headlines overshadow other events such as the Queen’s Speech, a potential downgrade of global growth forecasts that are due later today, and reports related to US-Sino talks. However, the UK jobs report may move the pound. Economists expect wage growth to have decelerated in August after hitting cycle highs in September.
The USD/JPY pair struggled to find direction on Monday and fluctuated in a tight consolidation channel below the 108.50 handle before closing the day virtually unchanged amid the subdued trading action due to the Columbus Day holiday in the United States (US).
With the US bond markets returning to action on Tuesday, the pair edged lower pressured by the sharp drop in the 10-year US T-bond yield, which was last seen losing 2.5%. The lack of clarity regarding the details of the “phase-one” trade agreement between the US and China seem to be forcing investors to readjust their positions following the decisive rally witnessed in the bond yields in the second half of the previous week. As of writing, the pair was down 0.1% on the day at 108.27.
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