1. Dollar Holds At Two Week High
The USD pushed further higher after better-than-expected U.S. GDP data last week enhanced the greenback’s yield attraction against its rival currencies. The EUR meanwhile remained under pressure, after a dovish ECB, a set of weak EU data which pointed to a struggling economy and the prospect of a no-deal Brexit; all of which is a tough combination for the common currency. The AUD is sitting at a support on the daily chart and may take a pause until we have clarity after the FOMC later this week.*
2. Boris’ Brexit Crusade Takes A Toll On GBP
Meanwhile Boris Johnson clearly is on a Brexit crusade and the rhetoric around a no-deal Brexit is getting more firm by the day which is adding to the stress in the EU and UK. Johnson will push for the United Kingdom to leave the European Union by October 31 with or without an agreement to protect trade with the country’s biggest export market. However, a “no-deal” Brexit could trigger a recession and cause the pound to nosedive, with some experts even claiming that the pound and dollar could even reach parity. GBP/USD was last seen trading 0.3% lower as of 9:00 GMT this morning.**
3. EU Bourses Slide Ahead Of Key Trade Talks
EU bourses recorded a muted open this morning following on the same bearish trend as their Asian counterparts as U.S.-China negotiations resume in Shanghai later this week, marking the first in-person trade talks since a truce was agreed in June. Today Munching and Lightizer from the US are on their way to Shanghai this time to rescue trade talks that had stopped around the G20 and keeping the market’s hope high for meaningful progress.***
4. All Eyes on the Federal Reserve
After last week’s of the dovish turn of the ECB it is the US Fed that is going to have its meeting come Wednesday and it seems that a 50bps rate cut is not going to happen. The US economic data remains solid and the US GDP last Friday beat expectations with 2.1% vs. a 1.8% expected. Market participants will still be watching this week’s U.S. Federal Reserve meeting very closely for any signs of future monetary easing.****
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5. Gold Steady, Oil Dips
Gold prices steadied on Monday ahead of the U.S. Federal Reserve meeting later in the week and as a strong dollar kept earnings capped. Oil prices edged somewhat lower but the price action remains rather uneventful awaiting further catalysts later this week. *****
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