With the US and Canada closed for the Labor Day holidays, it was UK politics and Brexit that were the main focus on Monday. In response to a move to pass a bill that would force the UK PM, Boris Johnson to request a Brexit delay until January 31st 2020, Johnson said that he will not ask the EU to delay Brexit beyond 31st October. He also issued an ultimatum to rebel Conservative MPs, by pledging to call a snap general election next month if the House of Commons pushes ahead with the bill, tabled by a cross-party group of backbenchers, seeking to block a no deal Brexit.
Cable headed sharply lower on the news but elsewhere the markets have been quiet and mostly rangebound although the Euro remains heavy, albeit within a tight range, while the DXY is ending the session at 99.05 as the squeeze higher continues.
Although the US has been closed, both stock futures and WTI are a little lower, while the metals are around 0.5% higher on the back of safe haven demand.
Looking ahead, Tuesday will focus on the Australian Retail Sales (exp 0.2%mm) and then a little later, the RBA Meeting. No change to policy is expected and rates are thought likely to remain on hold at 1%, so the focus is likely to lie in the wording of the statement, where an overly dovish outlook could see the Aud$ move towards the recent lows. Tomorrow will see the release of the Q2 GDP, where a soft outcome has been widely telegraphed (exp 0.5%qq, 1.4%yy) and should keep the pressure on the downside for the currency. Later on today, the ECB President-elect, Christine Lagarde will be speaking and traders will pay close attention to her outlook for the EU – which seems very unlikely to do much to help the Euro out, while the US session will focus on the ISM Mfg PMI (exp 51.0). The API Weekly Crude Oil Stock Inventory may provide some action for the oil price, while Kiwi traders will look to the Global Dairy Trade Index for guidance. Have a good day.
Economic data highlights will include:
Tue: Australian Current Account, Retail Sales, RBA Interest Rate Decision/Statement, ECB – Lagarde Speech, EU PPI, US Mfg PMI, ISM Mfg PMI/Prices Paid, Total Vehicle Sales, Construction Spending, Fed’s Rosengren Speech, Global Dairy Trade Index, API Weekly Crude Oil Stock Inventory
Market moves, in brief:
FX: DXY 99.05 (+0.24%)
Bonds: US10Y; 1.500% (-0.01%), German 10Y; -0.704% (-1.51%), UK 10Y; +0.409% (+12.8%), Australian 10Y; 0.895% (+1.28%), NZ 10Y; 1.075% (+0.94 %), China 10Y; 3.065% (+0.99%)
Stock Indices: DJI; -0.15%, S+P; -0.10%, NASDAQ; -0.15%, EUStoxx50; +0.17%, FTSE100; +1.04%, Shanghai Composite; +1.31%,
Metals: Gold $1529 oz (+0.57%), Silver $18.46 oz (+0.51%), Copper $2.530 lb (-0.12%), Iron Ore $84.6 per tonne (NYMEX) (+3.8%),
Oil: WTI $54.75 pb (-0.45%)
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