Forexlive Americas FX wrap: Cable soars on block a no-deal Brexit (and political chaos too)

Author: Greg Michalowski | Category: News

Forex news for NY trading on March 13, 2019

In other markets, a snapshot is showing

  • Spot gold is up $8.79 or 0.68% at $1310.39. A lower dollar today is helping to support gold now
  • WTI crude oil futures are up $1.48 or 2.58% at $58.35. The high for the day reached $58.48. Inventory data showed a surprise draw of inventories (-3862K vs est of a build of 3000K)
The US and European stocks ending the session higher.  For the S&P and the Nasdaq the major indices closed higher for the 3rd day in a row. That came after a 5 day losing streak. The declines from last week were erased at the highs but some late day selling took the major indices off those highs.  European shares also closed higher on the day.

Forex news for NY trading on March 13, 2019In the US debt market, yields are ending higher in a fairly quiet day.   The US treasury did sell 30 year bonds completing the auctions this week at a yield of 3.014%. That was the lowest since July 2018.

US yields were higher in a quiet trade today
For the European 10 year benchmark notes, yields also closed mostly with modest rises in yields.

The benchmark European 10 year yields rose
Today, was once again a focus on UK day as more votes on Brexit went in front of lawmakers.  The long and short is:
  • Lawmakers voted to block a no-deal Brexit
  • PM May said the UK will still leave without a deal unless something else is agreed. The onus is now on us to find a solution
  • Cabinet members abstained from voting with the government which is not a good sign
  • There will be a vote tomorrow on extension of Article 50 which is proposed until June 30th (that is after the EU elections....HMMM)
  • There are reports that some ERG will vote for the deal at the 3rd meaningful vote
  • Then ERG Baker says they will keep voting down May's deal
  • Then ERG was reported to voter for May's deal if May then resigns
  • PM May says she will not resign
  • Betting odds are 4:1 that she will be replaced by end of March
  • There is rumblings that the EU won't grant an extension
  • Is there another referendum? 
The net result is PM May's run is certainly more tenuous than any other time in history. For trading, the GBP moved sharply higher, and higher and higher with the GBPUSD trading to the highest level since June 2018 at 1.3379 - taking out the high from February at 1.3349 in the process -  but closing below that level with some last minute selling.  

The range for the day for the GBPUSD was 320 pips. The pair is ending up about 260 pips.  Other GBP pairs also took the pound higher, with will above average trading ranges (see red line in the lower chart below).

The ranges and changes of the major currency pairsWhen you look at the % changes of the major pairs vs each other, the GBP nearly lapped the field. The GBP rose against all the major currencies by 1.53% or better. The largest change wa 2.06%.  The only other currency pair that did not have a cumulative gain against all the major currencies was the CHF and that was just barely.  It benefitted from some safety flows I guess.  

The % changes of the major currency pairs.
Anyawy, I don't know how the dust all settles over the next 24 hours or until the extension time (if that is what happens) or until PM May resigns, or until the next meaningful vote, or another referendum vote, or next election.  What I do know is the day today saw the GBP squeeze higher and higher and higher.  

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