GBP outperforms peers ahead of Brexit negotiations
Sterling strengthened as much as 1.4% ahead of another round of Brexit negotiations this week which investors are speculating will result in a positive outcome. Markets moved towards risk-on trading and the USD is trading lower despite quarter-end flows. EUR/USD continues to trade within the low 1.1600's and technical indicators signal this is the most oversold the currency has been since February.
9/29 Tuesday: German CPI
9/30 Wednesday: US GDP Annualized; UK GDP
10/1 Thursday: US Initial Jobless Claims
10/2 Friday: US Change in Nonfarm Payrolls
September 28, 2020
EUR/USD 1.1670 GBP/USD 1.2868 USD/CAD 1.3378 AUD/USD 0.7066 USD/JPY 105.4800 USD/CNH 6.8220 USD/ILS 3.4618 USD/MXN 22.2424 USD/CHF 0.9272 USD/INR 73.7888
The dollar index dropped as the market moved towards risk-on assets. This move was partially offset by the start of quarter-end flows supporting the US dollar. The Bloomberg index slipped 0.2% this morning.GBP
The British pound surged the most in six months ahead of this week’s Brexit trade negotiations. Investors are speculating that this week’s talks could result in a breakthrough and shield the UK from a chaotic divorce from the EU. Sterling rose as much as 1.4% outperforming the G10 currencies.EURTechnical indicators signal that EUR/USD is the most oversold since February hitting a low of 1.1615. The intraday support for the currency pair is at the Sept 25 low of 1.1612.CAD
The loonie remains largely unchanged holding above the 1.3350 level. The Canadian dollar remains dependent on the broad USD tone and market risk sentiment.ASIA/PACIFIC
Since March, the Japanese yen has made several attempts to strengthen beyond the 104 level without any success. Last week asset managers boosted long yen positions to a record high based on data going back to 2006. Traders remain focused on uncertainties around the US presidential election, Brexit and additional coronavirus infections resulting in an upswing in purchasing the Japanese yen.
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