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Traders shed pounds at the start of the week as they trimmed the fat around UK’s weekend headlines.

Meanwhile, higher U.S. Treasury yields sent the Greenback higher across the board.

  • Japan’s PPI (y/y) up by 3.4% vs. 3.1% expected and previous
  • Japan’s preliminary machine tool orders (y/y) up from 45.0% to 49.9% in October
  • U.K.’s Rightmove house price index slips by 0.8% vs. 1.1% gain in October
  • EU preparing for Brexit talks collapse?
  • GBP dumped as a number of PMs reportedly want May out

Major Events/Reports:

Overall GBP weakness

Traders started their week by shedding some pounds, and no, it’s not because they worked out.

Over the weekend the Sunday Times reported that as many as 40 members of the parliament from PM Theresa May’s Conservative Party have agreed to sign a letter of no-confidence. BFD, since it only takes 48 to trigger an official leadership challenge on the PM.

It also didn’t help that Michel Barnier, EU’s Brexit negotiator, hinted that member states and businesses should prepare for a possible collapse of Brexit talks.

If you recall, David Davis, Barnier’s counterpart in the U.K. gave a different vibe when he shared that the negotiations were narrowed down to “few outstanding, albeit important, issues.

But in an interview with French newspaper Le Journal du Dimanche, Barnier revealed that Britain still hasn’t shared a formula for how much it believes it owes the EU, an issue which has been dragging the talks for months.

Barnier cautioned that while failure of talks is not a preferred option, it’s also a possibility. He added that

“Everyone needs to plan for it, member states and businesses alike. We too are preparing for it technically. A failure of the negotiations would have consequences on multiple domains.”

Mixed risk sentiment

Whether it was profit-taking from last week’s moves or concerns ahead of this week’s tax plan-related news, the U.S. Treasury yields rose and propelled the Greenback higher across the board.

Even the Asian bourses didn’t know what to make of risk sentiment.

  • Nikkei is down by 0.54% to 22,558.50;
  • A SX 200 is down by 0.26% to 6,013.90;
  • Hang Seng is up by 0.26% to 29,198.00, and
  • China’s A50 is up by 0.51% to 13,187.45.

Meanwhile, an explosion at a Saudi-Bahraini pipeline AND expectations of earthquake disruptions in Iraq and Iran boosted oil prices even higher.

  • Brent crude oil is up by 0.02% to $63.53 and
  • U.S.WTI is up by 0.05% to $56.77.

Major Market Mover(s):

GBP

The British pound was dragged lower across the board on possible challenges to Theresa May’s leadership.

GBP/USD is down by 44 pips (-0.33%) to 1.3121;
GBP/JPY is down by 26 pips (-0.17%) to 149.15, and
EUR/GBP is up by 26 pips (+0.29%) to .8882.

Rising U.S. Treasury yields weighed on the lower-yielding yen and boosted yen crosses higher:

JPY

USD/JPY climbed 17 pips (+0.15%) to 113.67;
CAD/JPY is up by 13 pips (+0.15%) to 89.59, and
AUD/JPY is up by 23 pips (+0.27%) to 87.08.

Watch Out For:

  • 7:00 am GMT: Germany’s wholesale price index (0.4% expected, 0.6% previous)