Market Review - 02/04/2019 23:58GMT
Dollar trades mixed, sterling rises on PM May's Brexit plan
The greenback traded mixed against its peers on Tuesday as U.S. Treasury yields eased after Monday's rally. Sterling rallied in New York session after PM May announced her plan for cross-party talks and the possibility of securing a Brexit delay from the EU.
Versus the Japanese yen, although dollar initially edged up to a 12-day high at 111.46 in Australia, price retreated to 111.29 in Asia, and then ratcheted lower to 111.25 in New York morning on cross-selling in jpy as well as weakness in U.S. Treasury yields before trading broadly sideways.
The single currency continued is recent losing streak. Euro met renewed selling at 1.1218 in Australia and fell to 1.1190 at European open. Despite recovering to 1.1213 (Reuters) at New York open, price dropped to a 22-day low at 1.1184 on usd's strength together with cross-selling in euro especially vs sterling. Later, the pair pared its losses and staged a strong rebound in tandem with sterling to 1.1215 in New York afternoon before stabilising.
The British pound went through a volatile session. Although cable initially dropped to 1.3030 in Australia after UK Parliament rejected all four Brexit options, price then staged a strong rebound to 1.3086 in Asia. However, renewed selling emerged and the pair fell to 1.3025 at European open. Despite recovering again to 1.3075, sterling tumbled to session lows at 1.3014 on Brexit deadlock. Later, cable erased its losses and rallied to an intra-day high at 1.3132 near New York close after UK PM May said she will ask EU for an extension to the Brexit deadline.
Reuters reported French President Emmanuel Macron urged Britain on Tuesday to come up with a plan to break the Brexit deadlock before a summit in Brussels next week, or risk slipping automatically towards a disorderly exit from the European Union.
Speaking ahead of talks with Irish Prime Minister Leo Varadkar, Macron said whether that alternative plan involved a snap election, a referendum or a customs union was for Britain to decide.
Reuters reported British Prime Minister Theresa May said on Tuesday she will ask the European Union for an extension to the Brexit negotiation period and will sit down with opposition Labour leader Jeremy Corbyn in an attempt to break the impasse in parliament.
In other news, Reuters reported International Monetary Fund Managing Director Christine Lagarde said on Tuesday that global growth has lost momentum amid rising trade tensions and tighter financial conditions, but pauses in rate hikes will help boost activity in the second half of 2019.
Lagarde, in a preview of the April 12-14 IMF and World Bank Spring Meetings, said the global economy is "unsettled" after two years of steady growth, with the outlook "precarious" and vulnerable to trade, Brexit and financial market shocks.
He also said that the IMF has revised its analysis of the U.S.-China trade war's impacts, showing that if all trade between the world's two largest economies were subjected to a 25 percent tariff, U.S. gross domestic product would fall by up to 0.6 percent while China's GDP would fall by up to 1.5 percent.
On the data front, research firm IHS Markit said its U.K. construction purchasing managers' index rose to 49.7 in March, a marginal improvement from February’s 11-month low but still a second consecutive contraction.
Eurostat said prices at factory gates in the 19 countries sharing the euro rose 0.1 percent month-on-month in February for a 3.0 percent year-on-year increase.
Data to be released on Wednesday :
Australia AIG services index, retails sales, trade balance, imports, exports, Japan services PMI, Chain Caixin services PMI, Italy Markit services PMI, France Markit services PMI, Germany Markit services PMI, EU Markit services PMI, retail sales, UK Markit services PMI, and U.S. Markit services PMI, MBA mortgage application, ADP employment change, ISM non-manufacturing PMI.
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