Forexlive European FX News 8 Oct: Hard Brexit exit looms (and trouble with US/China too)

Author: Giles Coghlan | Category: News

FX news for European session

FX news for European session

Other markets

  • Dax: -1.01%
  • UK FTSE: -0.24%
  • Euro Stoxx: -1.04%
  • France 40 (CAC): -1.04%
  • Gold: +0.75%
  • Silver: +0.73%

This will be my last session wrap of my latest stint covering the European session. Justin will return to his post after a well deserved break. 

The initial handover from Asian equites was risk positive with Asian markets optimistic on US China trade talks coming up on October 10 and 11. The initial risk sentiment looked positive for risk, however that changed early on in the session with some negative headlines for both Brexit and US/China talks.

First of all we had  news from China's Commerce Ministry that they would  retaliate after the US named 28 Chinese companies to blacklist. They said, 'stay tuned' for retaliation. Then we had Brexit related news that PM Johnson and Chancellor Merkel had a disastrous conversation where it was revealed that there was no chance of a Brexit deal. Then there was more negative news from China that talks were cut back on day and there was a name change of the vice premier indicating slightly less authority that he was carrying from Xi. The tone was negative and toward the end of the session there was more talk from the US limiting investments in Chinese companies from US Gov't pension funds.  This is not the sound of two sides about to make a deal. This is more aggressive than constructive. 

I expected the AUDJPY to move down during the session and it pinged the 72.00 handle at the time of writing. Gold and silver seemed obvious pairs to find buyers in such an environment and I alerted readers to that here, before they started climbing.  With Brexit and US/China risk they were obviously going to attract buyers. Longer term  weekly GBPJPYs shorts  look good, but the risk of a last minute deal is keeping me out of them. Often deals get done last minute and I could see a Brexit deal done this way., regardless of the seeming impossibility at present.

And so my friends, thanks once again for making my stay here a pleasure. Plenty of good comments and ideas through the last couple of weeks take care and feel free to  pop in and say hello on my morning post tomorrow at 0700BST (0600GMT)

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