Brexit Deal Boosts GBP

A Brexit transition deal cleared a major hurdle for Theresa May and the Bank of England on Monday. GBP was the top performer while JPY lagged. RBA meeting minutes are due up next. The FTSE100 Premium short was closed for a 235-pt gain after CADJPY and GBPAUD hit their final targets for 200 and 290 pips respectively.

Brexit negotiators from the UK and EU announced a preliminary deal on a transition package that will extended to the end of 2020. That timeline will encourage UK business to make investment decisions and give confidence to the BOE that the trajectory of the UK economy is improving.

Cable climbed as high as 1.4088 from 1.3925 before sliding back 50 pips.The euro also got a lift from an ECB sources report showing that doves have relented and that the debate is moving on to how quickly to hike rates and how to communicate them. That boosted the euro up to 1.2350 from a low of 1.2260.

The stock market, meanwhile, suffered on as tech stocks dipped. A broader story about data abuse at Cambridge Analytica sparked a rout on Facebook that spread. Jitters about Trump and the FBI added to the worries. Critical questions about elections will continue to circulate but aside from companies directly involved, it isn't likely to an economic story.

Another key driver for markets is the tariff decision from White House with exemptions due before Friday's deadline. Comments from various European policymakers were upbeat on Monday and details of US requests showed the focus is tilted towards China. That makes it more likely exemptions will be granted as the US forms a 'coalition of the (reluctantly) willing' in a slow march to a trade war with China.

In the short-term, the Australian dollar is in focus. It rebounded to finish higher Monday after breaking down to the lowest levels of the year. Iron ore prices continue to slide but the immediate focus will be the RBA minutes at 0030 GMT and comments from the RBA's Bullock at 0415 GMT.