Cable at Fresh Lows as May’s Plan DOA
|Market Drivers May 22, 2019
UK PPI cooler
FOMC minutes on tap
Nikkei 0.05% Dax 0.09%
Oil $62/bbl
Gold $1275/oz.
Europe and Asia:
UK CPI 1.8% vs 1.9%
North America:
CAD Retail Sales 8:30
USD FOMC Minutes 14:00
Cable hit fresh 6 month lows in early London trade today with traders expressing their disappointment as PM May last ditch effort to salvage her Brexit deal yesterday.
Ms. May’s plan appears to be dead on arrival as both Labor and Tories indicated that they would not support her proposal to first approve the customs union deal she negotiated and the possibly consider a second referendum on the matter. Indeed, markets were rife with reports that there was an effort afoot amongst the Tories to push Ms. May out of office as early as Wednesday without even allowing her to put her final effort to a test.
Cable dropped to 1.2660 in London morning session with short now eyeing stops at 1.2650 and perhaps even the 1.2600 figure as UK politics and more importantly progress on Brexit appears to be in total disarray. The situation is further complicated by reports that Nigel Farage’s far-right pro-Brexit party is leading in the polls ahead of the EU elections – a factor that would only exacerbate divisions in UK politics.
On the eco front, the only release was the UK inflation readings which came in a bit more muted than forecast with core printing at 1.8% vs. 1.9% projected. Overall UK still maintains one of the highhe inflation readings in G-7, but the tepid price levels will allow BoE to remain stationary for a while longer alleviating any upward pressure on the pound.
In North America today the market will get a look at CAD Retail sales which could print hotter than forecast given the recent strong labor data. The loonie has been well bid since the start of the week, supported by firm oil prices and today’s report could push USDCAD through the floor of the 1.3500- 1.3400 range it has been trading in for the past month.
Lastly, the release of FOMC minutes could impact USDJPY in late afternoon NY trade if they maintain the generally hawkish tone of Chairman Powell’s remarks. The rate markets continue to price a rate cut from the Fed by end of year, but if policymakers are content to sit still given the steady growth of the US economy US 10 year rates should begin to inch up. USDJPY has cleared the 110.00 barrier now and any confirmation of a hawkish bias from the Fed could send it towards 110.00 figure as the week proceeds.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.