Cross-party Brexit talks collapsed driving the UK pound lower, the dollar made gains across the board.
May 17, 2019
The UK pound dropped to four-month lows as cross-party Brexit talks collapsed. The dollar gained after China said it won’t resume trade talks until the US shows more sincerity in its negotiating. The closely watched Chinese yuan declined to six month lows near 6.92, pushing emerging market currencies and stocks lower. With all the increased uncertainty, foreign stocks and US S&P futures moved lower.
John F. Kennedy
“You cannot negotiate with people who say what’s mine is mine and what’s yours is negotiable.”
May 17, 2019
EUR/USD 1.1174 GBP/USD 1.2759 USD/CAD 1.3493 AUD/USD 0.6883 USD/JPY 109.72 USD/CNH 6.9410 USD/ILS 3.5731 USD/MXN 19.1613 USD/CHF 1.0108 USD/INR 70.2600
The dollar moved higher in response to the increased uncertainties associated with the UK Brexit and China trade talks. Risks with Iran loom larger as traders increasingly believe that Trump may put additional pressure on Iran ahead of the 2020 US presidential elections.GBP
The UK pound dropped to fresh lows following confirmation from the Conservative and Labour parties that their talks had collapsed. PM May is still determined to try to push through a Brexit agreement, but her days are limited. Candidates to replace her within a summer time frame are hot topics in the press.EURThe EUR/USD moved only slightly lower overnight. The euro was supported to some extent by large buying of the EUR/GBP cross rate: buying euro / selling UK pound; the rate reached its highest level since January.CAD
The USD/CAD moved higher, but remains trading below 1.35. Although oil prices edged higher overnight, traders are saying that they are not convinced that oil has much more room on the upside.ASIA/PACIFIC
The Chinese yuan hit fresh lows against the dollar, as traders increase bets that China may weaponize their currency by engineering a CNY depreciation to help their exporters – best seen as offshore CNH is being pushed much lower/weaker than onshore CNY.
The yen remains bid as a safe haven currency in the face of heightened geopolitical risks.
The Australian dollar continues sliding despite its key commodity, iron ore, seeing prices reach its highest level since 2014. Traders point to a supply crisis in Brazil and Australian, the top iron ore producers.
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