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Daily FX Wrap: More GBP sales, but post Brexit lows are holding for now. CAD weakness stemmed at 1.3200 as Oil prices dig in. EUR strength bolstered by German IFO results.
The clear theme of the day at the very outset was to push GBP closer towards the post Brexit lows, driven by weekend events where the prospect of Article 50 being triggered was perceived to have been brought closer, both by comments by cabinet ministers (Johnson) as well as reports that German lawmakers were losing patience with the UK dragging their heels in the negotiations. EUR/GBP was the primary target, but trading up through .8700, we have yet to break the .8724 highs. Cable was pressed into the low 1.2900’s again, but continues to find buying interest down here, though EUR/USD gains will have confused some of the moves also. The German IFO survey results were a clear positive for the single unit, but going against it were fresh concerns among some of Europe’s leading banks, which suffered notable losses on the day. The lead spot rate topped out at 1.1270 before edging marginally lower – the latest platform for buyers coming in around 1.1200. Elsewhere, USD/CAD was pushed back up to just shy of 1.3200, but as Oil prices hold their ground, buyers failed to generate a fresh push through the figure to test the key 1.3250 mark. Choppy trade seen in the meantime, as the US election debate tonight will impact on all USD pairings. To this end, USD/JPY support ahead of 100.00 is getting a helping hand for now, but there a chorus of calls for sub 100.00 here, and the trade may be getting a little overcrowded despite the implications of BoJ policy on the economy and the yield curve. AUD/USD has been steadily creeping higher again in the background, while NZD has also stabilised, despite some soft trade data released overnight which saw the spot rate testing, but holding the Friday lows.
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