ForexLive European morning FX news wrap: Pound jumps all over the place ahead of Brexit delay vote
Forex news from the European morning session - 14 March 2019
- UK lawmakers said to put forward amendment seeking to force parliament to hold indicative votes
- Brexit: DUP source said that 'tweaks won't cut it' in talks with government
- China, US said to delay Trump-Xi meeting to at least April
- Ifo cuts Germany 2019 GDP growth forecast to 0.6% from 1.1%
- Tusk says will appeal to EU27 to be open to a long Brexit extension
- Brexit: New legal advice on the cards?
- Brexit: Tory lawmakers said to be given free vote on extension motion later
- Swiss government cuts 2019 GDP growth forecast to 1.1% from 1.5%
- PBOC says will continue to prevent risks while stabilising economic growth
- USD leads, GBP lags on the day
- European equities higher; E-minis down 0.1%
- US 10-year yields up 0.7 bps to 2.628%
- Gold down 0.9% to $1,297.03
- WTI down 0.3% to $58.06
- Bitcoin down 0.2% to $3,844
The pound once again is the highlight of the European morning as it jumped all over the place in light of the political disarray in Westminster. Cable initially retraced overnight gains to trade around 1.3270-90 ahead of the London open and then got bid up by a misinterpreted Reuters headline suggesting that the DUP is considering to support of May's Brexit deal. The pair moved up to 1.3310 on the back of said headline.
Thereafter, further talks of attorney general Cox maybe issuing a new legal advice also helped the pound a little as cable moved to 1.3330 before backing off quickly towards 1.3300 again. Price then slowly tracked lower as more and more uncertainty crept in ahead of the Brexit extension vote later.
Cable backed off to 1.3240 before slipping further to 1.3210 before recovering to trade around 1.3230-40 levels currently. If you're wondering what is going on with the pound, the fact that the 1-month implied volatility in the currency surpasses that of the Turkish lira basically tells you all you need to know about how the quid is trading right now.
Meanwhile, the dollar held steady as it gained early on with the aussie and yen softer as a result of weaker yields. USD/JPY moved up to 111.60-70 as Japanese yields fall to their lowest levels since late 2016 across the curve.
AUD/USD was not helped by weaker Chinese data in Asian trading as the pair traded around 0.7060-70 before being nudged lower to 0.7040 levels as US and China are said to have postponed the Trump-Xi meeting to April.
That not only impacted the aussie but risk assets also took a notable hit with equities losing some ground and US equity futures falling into negative territory. Oil prices also fell from the highs all the way to session lows.
The dollar held firm despite the news and that helped to see EUR/USD move back towards the 1.1300 handle from around 1.1310-20 levels earlier.
Looking ahead, expect more Brexit drama to follow as we gear towards the extension vote later with the indicative votes amendment being the one to watch out for.