UK pound seesaws on Brexit news
Scott Petruska, CFA " | October 17, 2019
The UK pound initially rallied following news that PM Boris Johnson secured a Brexit deal with the EU, but gains were cut back after an Irish political party pulled its support for the deal. The dollar weakened across the board as the potential deal triggered a risk-on mood in the markets.
October 17, 2019
EUR/USD 1.1124 GBP/USD 1.2806 USD/CAD 1.3162 AUD/USD 0.6825 USD/JPY 108.60 USD/CNH 7.0785 USD/ILS 3.5394 USD/MXN 19.1503 USD/CHF 0.9882 USD/INR 71.1687
The dollar is lower across the board as the positive Brexit news triggered a risk-on mood in the markets. Risky emerging market currencies rallied, but pared gains after Northern Ireland’s Democratic Unionist Party (DUP) said they don’t support the deal. Yesterday, US retail sales in September fell for the first time in seven months, an important barometer of the mood of the US consumer.GBP
The UK pound seesawed as a spike to five-month highs in the currency followed news of a UK-EU Brexit agreement, but the rally reversed and fell quickly after news that the DUP was not fully on-board. Boris Johnson’s Conservative Party is short of a majority in Parliament, so it needs the DUP’s support. The next step - it’s up to Parliament to approve the deal.EUR
The euro jumped higher on the positive Brexit news. There are no eurozone data releases today to impact markets.CAD
The general upbeat mood in the markets led to a modest rally in the Canadian dollar. The loonie rose to its best level in a month, but underperformed relative to its G-10 peers.ASIA/PACIFIC
Asian emerging market currencies rallied following the positive Brexit news. According to Bloomberg, eighteen of 24 EM currencies tracked by Bloomberg made advances today.
Tonight, China releases its 3Q GDP numbers. Traders will be watching closely to see if it falls below the psychological key 6% level.
The Australian dollar was the top performing currency overnight, gaining 1% on the upbeat Brexit news and the drop in Australia’s unemployment rate for September.