Forex news from the European morning session - 3 September 2019
Headlines:
- Cable gets a bit of a pop back above 1.20
- UK House of Commons confirms that application for emergency Brexit debate has been submitted
- Brexit: Corbyn said to propose extension "mechanism" to get Labour MPs to vote for general election
- UK August construction PMI 45.0 vs 46.5 expected
- Huawei: US launched cyber-attacks against its systems
- Brexit: Farage confirms he won't stand against Tories if Johnson promises to leave EU without a deal
- Labour spokesperson: Of course we want a general election
- Switzerland August CPI 0.0% vs -0.1% m/m expected
- Cable falls below 1.20 for the first time since January 2017
- RBA leaves cash rate unchanged at 1.00% as expected
Markets:
- AUD leads, GBP lags on the day
- European equities lower; E-minis down 0.8%
- US 10-year yields down 1 bps to 1.486%
- Gold flat at $1,529.66
- WTI down 1.8% to $54.12
- Bitcoin up 0.5% to $10,460
It was a session filled with Brexit headlines again for the most part as the pound jumped around ahead of the parliament showdown in Westminster later today.
Cable initially fell to near three-year lows below 1.2000 on further political uncertainty, dropping from 1.2155 to a low of 1.1959 before recovering some ground towards 1.1980-90 levels.
Thereafter, the pound got a shot in the arm as rebel/opposition lawmakers officially submitted the application to debate avoiding a no-deal Brexit with cable rising to a high of 1.2083 before fading to 1.2010-30 levels currently.
If anything else, it goes to show how jittery markets are pertaining to any key Brexit headlines and it also reveals how much potential the pound can gain on short covering if the headlines work in favour of buyers over the coming days.
As it stands, it's all about the sequence of events as to how the pound may react.
Elsewhere in markets, the risk mood remains more cautious as bond yields slipped in the European morning to reflect the nervous sentiment observed in equities.
Treasury yields were up by 2-3 bps across the curve but fell off sharply early in the session and that saw USD/JPY ease from 106.30 to a low of 105.92 before hovering around 106.00-10 levels seen currently.
The dollar continued to hold firm for the most part as it continues to build on gains against the likes of the euro and kiwi. EUR/USD traded softer to a low of 1.0926 but has been hovering around 1.0930-40 levels since then.
Meanwhile, the aussie gathered a bit of a reprieve after the RBA left its cash rate unchanged with AUD/USD climbing from 0.6695 to 0.6730 levels now but gains remain limited by the key hourly moving averages for the time being.
Looking ahead, expect the focus to stay on Brexit happenings in Westminster but also keep an eye on the risk mood with US and China yet to iron out their proposed meeting this month.
