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Risk-taking propped up the higher-yielding Aussie and Kiwi while the pound joined the winners’ circle. The dollar and yen had a mixed run as the euro and franc found themselves lagging behind.

  • U.S. house price index up by another 0.2% vs. 0.4% forecast
  • U.S. Markit flash manufacturing PMI rose from 55.4 to 55.5 vs. 55.1 conensus
  • U.S. Markit flash services PMI dipped from 56.5 to 56.2 vs. 56.5 forecast
  • Richmond manufacturing index unchanged at 20 vs. consensus at 19
  • U.K. PM May: “I will lead negotiations with the EU”
  • New Zealand trade balance turned from 208M NZD surplus to 118M NZD deficit

Major Events/Reports:

U.K. PM May to take control of Brexit talks

It seems that No. 10 has had enough of the back and forth in Brexit arguments, declaring that she will take control of discussions with the EU so as to present a solid front. In a statement she wrote:

“I will lead the negotiations with the European Union, with the secretary of state for Exiting the European Union deputising on my behalf.

Both of us will be supported by the Cabinet Office Europe Unit and with this in mind the Europe Unit will have overall responsibility for the preparation and conduct of the negotiations, drawing upon support from DExEU and other departments as required.”

To put it bluntly, this implies a downgrade for the Department of Exiting EU and a demotion for U.K. Brexit Minister Dominic Raab. However, Raab didn’t seem too baffled by this decision, assuring:

We’ve been very clear – there’s no tension between us, I think that’s clear – that all the advice and all the meetings will be attended by me with the PM and all the advice will come to me.”

Raab will be in charge of domestic preps, planning for a “no deal” scenario, and basically dotting the i’s and crossing the t’s. That’s not all that surprising since he was just given the post a couple of weeks back, after David Davis threw in the towel.

Risk-on moves in play

Traders were hungry for more risk during the New York session, with the Dow chalking up strong gains on upbeat earnings data.

  • Dow 30 index is up 197.65 points to 25,241.94 (+0.79%)
  • S&P 500 index is up 13.42 points to 2,820.40 (+0.48%)
  • Nasdaq is down 1.10 points to 7,840.77 (-0.01%)

Gold was also slightly higher on dollar weakness while crude oil was able to benefit from the shift in focus away from oversupply concerns and trade tensions.

  • Spot gold is up $0.54 to $1225.03 per troy ounce (+0.01%)
  • WTI crude oil is up $0.77 to $68.70 per barrel (+1.18%)

The IMF reported that staff estimates signal that the U.S. dollar is overvalued by 8-16% based on fundamentals.

Major Market Mover(s):


Pound bulls cheered the “one team, one chain of command” strategy announced by PM May and supported by Brexit Minister Raab as this could give the U.K. team a better negotiating stance with the EU.

GBP/USD popped up from 1.3110 to a high of 1.3160, GBP/JPY climbed from 145.82 to a high of 146.32, EUR/GBP tumbled to .8887, and GBP/NZD held on to 1.9325.


The Aussie was also one of the top performers for the session as it was able to benefit from slightly higher gold prices and a pickup in risk appetite. Positioning ahead of the quarterly CPI release may have also propped it higher.

AUD/USD advanced from .7388 to a high of .7434, AUD/JPY rallied from 82.27 to 82.50, EUR/AUD slipped to 1.5732, GBP/AUD is down to the 1.7700 mark, and AUD/CAD climbed to .9772.


The European tandem reeled from the return in risk-taking and gave back their earlier safe-haven gains. Mixed PMI results in the earlier session may have also clipped the shared currency’s wings.

EUR/USD slipped from 1.1713 to a low of 1.1672, EUR/JPY is down to the 130.00 handle, EUR/NZD retreated to 1.7172, and EUR/CAD fell to 1.5372.

Watch Out For:

  • 1:30 am GMT: Australia’s quarterly CPI (gain from 0.4% to 0.5% expected)
  • 1:30 am GMT: Australian trimmed mean CPI (no change from 0.5% expected)