Forexlive Americas FX wrap: Cable soars on block a no-deal Brexit (and political chaos too)
Forex news for NY trading on March 13, 2019
- S&P and Nasdaq close up for the 3rd day in a row but give a little back into the close
- Brexit - UK parliament speaker indicates extension to June 30 …
- UK Cabinet ministers who abstained will not resign - report
- May says no-deal Brexit is still default position unless something else agreed
- UK Parliament votes to block a no-deal Brexit in 321-278 vote
- Malthouse amendment defeated 374-164
- UK Parliaments votes 312-308 on amendment to that will block no-deal Brexit
- Crude oil futures settle at $58.26 today
- Trump says in no rush to compete China trade deal
- US grounds all 737 MAX 8 and MAX 9 planes
- ECB's Coeure: Most of slowdown in eurozone due to global factors
- US sells 30-year bonds at 3.014% -- lowest since July 2018
- European shares are mostly higher at the end of trading
- Atlanta Fed raised GDP 1Q forecast to 0.4% from 0.2% last
- DOE crude oil inventories -3862K vs 3000K estimate
- EU Malmstrom: EU nations are tilting toward approve US/EU trade deal
- US January construction spending +1.3% vs +0.5% expected
- WTI crude climbs to the highest since March 1 in third day of gains
- UK fin min Hammond cuts 2019 GDP forecast to 1.2% from 1.6%
- Canada February Teranet house price index -0.4% m/m vs -0.1% prior
- US February PPI final demand 0.1% vs 0.2% estimate.
- US January prelim durable goods orders +0.4% vs -0.4% expected
- Lighthizer won't close China deal without IP changes, senator says
- The GBP is the strongest. The NZD is the weakest as NA traders enter
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.
In 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.
For the European 10 year benchmark notes, yields also closed mostly with modest rises in yields.
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).
When 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.
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.