 Sterling turned cautious as markets are now awaiting the result of UK Prime Minister Theresa May's Cabinet meeting on Brexit. The withdrawal agreement text should have been agreed with the EU. Approval by the Cabinet will give the green-light to EU chief negotiator Michel Barnier to declare that "decisive progress" is made for a November EU summit. May would tell the House of Commons the results after the meeting. Meanwhile, Barnier will also make a statement. It could be rather volatile for the Sterling in the upcoming hours. Though for now, the Pound is trading as the second weakest one, next to Swiss Franc. Yen is the third weakest, partly due to weak GDP data, and partly due to persistent fall in JGB yield. New Zealand Dollar is the strongest one for now, followed by Canadian Dollar. Some support is seen as WTI crude oil dipped to as low as 54.85 but recovers to 56.70 for now. But that support for the Loonie could be brief. Euro is indeed the third strongest at this point, despite weak Germany data and Italy budget jitters. Dollar reacts little to CPI release but will turn focus to Fed Chair Jerome Powell's comments in the upcoming Asian session. Technically, the forex markets are clearly in consolidation mode. For the Pound, break of 1.3741 resistance in GBP/USD and 149.70 in GBP/JPY are at least needed to prove its strength. Otherwise, we won't believe the move. While Dollar trades lower since yesterday, there is limited selling. We'd look for Dollar buyers to come back, probably after UK May settles her Cabinet. In other markets, major European indices are trading higher at this point. FTSE is up 0.56%, DAX is up 0.61% and CAC is up 0.45%. German 10 year yield drops -0.0053 to 0.408. Italy 10 year yield rises 0.398 to 3.487. That is, German-Italian spread remains above 300. Earlier in Asia, Nikkei closed up 0.16%. But Hong Kong HSI, China Shanghai SSE and Singapore Strait Times all closed down, by -0.54%, -0.85% and -0.34% respectively. Japan 10 year JGB yield drops -0.0077 to 0.108, below 0.11 now. |
