The UK pound rallies on Brexit optimism, dollar firms on trade talks
Scott Petruska, CFA " | October 15, 2019
The UK pound rallied to a five-month high fueled by optimism of a near-term Brexit deal. The US dollar index gained as US-China trade talks resume, Trump demands that Turkey enact a cease-fire, and JP Morgan beats expectations as Q3 earnings season begins.
October 15, 2019
EUR/USD 1.0995 GBP/USD 1.2641 USD/CAD 1.3233 AUD/USD 0.6746 USD/JPY 108.45 USD/CNH 7.0858 USD/ILS 3.5189 USD/MXN 19.2553 USD/CHF 0.9985 USD/INR 71.5710
The dollar held steady today, but is 0.25% lower since last Friday. Traders are cautious even as US-China made “substantial progress” and as Trump demands Turkey enact a cease-fire as he slaps sanctions on key Turkish officials and steel imports. The Q3 US earnings season kicked off with JP Morgan’s better-than-expected results.GBP
The UK pound jumped higher following news that EU chief negotiator Michel Barnier said a Brexit deal is possible this week. The pound is trading over $1.26, its highest level since June, and up 5% from August’s lows near $1.20.EUR
The euro dropped ahead of today’s closely-watched German ZEW survey of economic sentiment, reflecting institutional investors’ opinions for the next six months. The data, just released, was weaker than expected - another show of concern that Germany has fallen into recession amid trade tensions.CADThe USD/CAD currency pair gained slightly over the long weekend, and now trades solidly over 1.32. The weaker Canadian dollar can be attributed to soft oil prices and the generally stronger US dollar in the FX markets. Also, the closely-followed US-Canada 2-year yield spread moved lower to a two-year low of minus 7 basis points (Canada yields less than US).ASIA/PACIFIC
The Chinese yuan and the Japanese yen both weakened slightly today from the generally stronger US dollar. China releases its Q3 GDP on Friday.
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