A lack of economic data and events led to a quiet start into the new trading week. Most major currency pairs consolidated in a rather tight range, with Cable being the only exception. GBP/USD rallied on rumours that the ERG could support UK PM May tomorrow. However, this was misinterpreted in the beginning, as the ERG backing May´s deal is linked to a prerequisite that is unlikely to happen. Cable retraced most of its gains in the late London session.
The focus in the next 24 hours will be on the Brexit vote in the UK parliament. There is not confirmed time, but it is expected to happen between 7-9 PM local time. The market is expecting May to fail, and it does seem like the most likely outcome. Should that be the case, traders should brace for a spike in GBP volatility.
The two major safe haven currencies - JPY and CHF - caught a bid today, as weak Chinese trade data led to concern that the effects of the trade war are increasingly being felt in the real economy. The Australian Dollar came under pressure and closed the day below 0.72 support.
The Session Ahead:
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Two-year yields have covered their prior six-month range in the last week alone – and whether or not this move is sustainable matters a lot