Forex today: Crazy moves around Brexit, dollar lower as US yields fall to lowest levels for November so far

There was a risk-off mood in Asia that extended into Europe and US markets on Wednesday sending US treasury yields and US stocks off a cliff. However, Brexit was the main attraction. The pound was very volatile as a result on conflicting headlines rolling out ever 30 minutes near enough.the outcome was that the Cabinet approved the Brexit document, but we now wait for the parliamentary disapproval. This is the most significant risk to the pound and hopes of a Brexit deal because if the Parliament doesn't approve the Brexit agreement, then one possible scenario is there is a snap election, which could feasibly see Labour elected into power.

As for rates, the US 10yr treasury yields initially rose from 3.13% to 3.16% but dropped during the NY afternoon to 3.09%. The dollar was lower due to this and fell a full point to 96.80 with the US 10 years being the lowest so far this month. The shorter-term 2yr yields fell from 2.90% to 2.84% while tracking the Fed fund futures yields repricing the chance of another rate hike in December at 70% (from 75%).

Currency action

EUR/USD was better bid and tracking movement in the dollar and taking its cues from Brexit headlines as well, playing out its derivative role. EUR/USD moved higher from 1.1263 to a high of 1.1344. As far as data, the US core CPI y/y & weakly earnings offered some downside misses and UST yields & US dollar were lower subsequently. EUR/USD was nearing the 10-DMA and fell back towards 1.13 the figure for the NY close. GBP/USD was the main attraction yet again, being tugged and pulled over ever-changing Brexit headlines. The threat to UK's PM May's leadership was weighing the heaviest on the pound despite a Brexit deal signed off ahead of presenting it to Parliament where the BBC reported that the Brexiteers from May's party has been seen calling a no-confidence vote on Thursday. GBP/USD moved between a range of 1.2886 and a high of 1.3037. EUR/GBP was just as choppy and was ending the North American session at 0.8742, higher by +0.43% and traded within a range of between 0.8755-0.8668.  USD/JPY fell on Brexit risk scenarios and made a low of 113.30. However, stocks were falling off a cliff and the VIX was as high as 23 at one stage with the S&P was down 20.60 points, and DJIA was down by  205.99 points leaving USD/JPY exposed to the downside. USD/JPY ended at 113.63. AUD/USD was running higher from 0.7188 and met a high of 0.7253 and closed at 0.7234. The pair was making headway despite the number of risk factors floating around Wednesday's financial markets and was lifted on a stage 1 positive outcome from the Brexit saga going to the wire ahead of a Parliamentary vote as stage 2. However, Aussie jobs are n the cards and will be drawing plenty of the market's attention considering the Sep report that sent the Aussie in a tear due to an impressive change in the unemployment rate. 

Key notes from US session:

• Wall Street closes in red dragged by financials and technology
• S&P500 Technical Analysis: Double bottom bull flag can be in the making above 2,700 figure
• EU's Barnier: Brexit deal brings legal certainty on consequences of Brexit

Key events ahead:

• When is the Aussie Unemployment report, and how could it affect the AUD/USD