Forex Today: GBP/USD bracing for another rocky day, US recession fears rise, and BOC decision looms
|Here is what you need to know on Wednesday, September 4:
- UK: GBP/USD has been extending its gains above 1.2100 after the UK parliament voted in favor of debating a bill that would prevent the government from leaving the EU without a deal on October 31. Lawmakers will debate the law today and the opposition will try to complete its legislation as fast as possible. Prime minister Boris Johnson said that the bill strips him of negotiating powers and called for a general election – now due on October 15. Earlier, he lost the majority in the House of Commons after one Conservative defected to the Liberal Democrats. Moreover, the Tories expelled members that voted against the government. Labour and other parties are willing to go to the country but only after the bill has passed.
- Another rocky day in parliament is due with MPs battling on the sequence of laws as trust remains low. Markit's Purchasing Managers' Index for the services sector is also in play for the pound. Moreover, Bank of England Governor Mark Carney and his colleagues are set to testify. The focus remains on Brexit.
- The US dollar remains on the back foot against most peers after ISM's manufacturing PMI showed contraction and the lowest levels in three years. Fears of a recession are rising. Federal officials that spoke on Tuesday are split between leaving policy unchanged and slashing rates by 50 basis points. Fed members John Williams, James Bullard, and Charles Evans will be speaking throughout the day.
- President Donald Trump remained optimistic about reaching a deal with China. Markets are waiting for news about fresh talks.
- EUR/USD is off the lows but trades below 1.1000 amid USD weakness and as several members of the European Central Bank have pushed back against a new bond-buying scheme (QE). Final services PMIs are scheduled today.
- Australia: The economy grew by 0.5% QoQ in the second quarter as expected. Annual growth at 1.4% is the lowest since 1991. AUD/USD has been recovering. Previously, the Reserve Bank of Australia left rates unchanged but left the door open to rate cuts.
- The Bank of Canada is set to leave its interest rate unchanged at 1.75% today. Canada enjoys relatively favorable economic conditions but uncertainty looms. Canada's trade balance is released before the BOC decision.
- Bitcoin is consolidating the gain made on Tuesday.
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