Forex Today: Trade uncertainty dominates markets, Boris Johnson in new trouble, China recovering

Here is what you need to know on Monday, September 30: 

  • The market's mood has stabilized after a US official denied that the US will limit investor portfolio flows into China and the delisting of Chinese companies from US exchanges. However, the official has said it will not happen "for now." 
  • China: The Caixin Manufacturing Purchasing Managers' Index beat expectations with a jump to 51.4 in September, showing a recovery. The official PMI also exceeded projections. China goes on a week-long holiday from Tuesday which means that trade negotiations will likely remain on the back burner.
  • Brexit: The Conservative Party's annual conference kicked off in Manchester amid allegations that prime minister Boris Johnson groped a female journalist in 1999 and further calls to investigate Johnson's relations with an American entrepreneur when he was Mayor of London. The PM and the party continue insisting that the UK will leave the EU by October 31 without breaking the law -- the Benn Act which requires asking for an extension to Article 50. Opposition leaders meet today to discuss the next steps and ousting Johnson is one of the options. Some opposition leaders are reluctant to install Labour leader Jeremy Corbyn in Downing Street.
  • The pound dropped on Friday after Michael Saunders, a hawkish member of the Bank of England, said that the BOE may have to cut rates even in case of a smooth Brexit as uncertainty has already taken its toll. Final UK GDP for the second quarter is expected to confirm the economy's contraction. 
  • Mario Draghi, the outgoing President of the European Central Bank, has called on euro-zone governments to invest and to enact a common European budget. His political calls will likely be rebuffed by Germany and other fiscally-hawkish countries. Germany publishes its preliminary inflation figures for September today.
  • Currency action has been subdued at the beginning of the new week, with only the New Zealand Dollar standing out with a slide below 0.63 after the ANZ Business Confidence slumped to -53.5.
  • Oil prices remain on the back foot with WTI Crude trading below $56.
  • Cryptocurrencies are also retreating with Bitcoin depressed below $8,000.

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