Forex news from the European morning session - 17 October 2019
Headlines:
- DUP reportedly won't vote for Johnson's Brexit deal on Saturday
- Brexit: Johnson said to ask European leaders to rule out further delay
- UK PM spokesperson: Saturday vote in parliament will be a meaningful vote
- It's not just all about the pound when it comes to Brexit
- DUP spokesman: Position on Brexit deal remains unchanged
- Juncker: Where there is a will, there is a deal - we have one!
- Whispers: Brexit deal said to have been reached
- China commerce ministry: We are discussing the next phase of trade talks
- China commerce ministry: The goal is to stop the trade war, remove all tariffs
- China reiterates that US trade talks were constructive and there was substantial progress
- Brexit: DUP not on board with with current suggestions on customs, consent
Markets:
- AUD leads, USD lags on the day
- European equities higher; E-minis up 0.3%
- US 10-year yields up 2.6 bps to 1.766%
- Gold down 0.1% to $1,489.30
- WTI down 0.7% to $52.97
- Bitcoin up 1.4% to $8,097
Markets got jumpy as the UK and EU managed to strike a Brexit deal (again) but it is starting to shape up like an all too familiar story as the euphoria dies down a little.
Boris Johnson managed to get an agreement done with European leaders but it will now be put to the test in the UK parliament during a meaningful vote on Saturday - something which Theresa May has failed to deliver on three occasions.
The pound fell to a low of 1.2750 early on as the DUP was not on board with overnight negotiations, before climbing to 1.2840 as a deal was close to being struck.
Once announced, cable shot up to a high of 1.2990 before settling around 1.2930-40 as the DUP reiterates that their position is unchanged.
Thereafter, the pound lost further steam as markets come to terms with the struggle that Johnson may have in getting a vote passed in parliament and cable fell to 1.2850-70 levels that we're seeing currently.
The Brexit deal optimism didn't just help lift the pound as risk assets got a notable boost. US 10-year yields jumped as much as 5 bps at one point and that saw USD/JPY move up to 108.94 before falling back off to 108.75 as the optimism fades a little.
Nonetheless, the dollar held weaker throughout and AUD/USD is maintaining gains in search of a key technical break beyond resistance around 0.6800-15. The aussie is also boosted by a more steady labour market report that saw RBA rate cut odds scaled back.
Looking ahead, the main focus remains on the pound as Brexit headlines continue to dominate the wires but keep an eye out for risk trades as well with China GDP data due tomorrow alongside more Fedspeak over the next two days.
