The Pound is the clear winner as we speak after the EU’s chief negotiator Barnier mentioned in a speech to the European Parliament this morning that an settlement with the UK was inside attain. Much more constructive, he said that the EU was not out to problem the UK’s independence, saying that the EU’s stance in talks is ‘absolutely appropriate with the respect of British sovereignty.’ This handle has gone a protracted technique to easing tensions between the 2 sides and the purpose is now for a deal by mid-November.
As we talked about yesterday, political ‘deadlines’ are sometimes way more versatile than initially thought, and so it seems with Nancy Pelosi’s Tuesday time restrict. Though the possibilities of a big scale deal that get by way of the Senate this aspect of the election are fading, inventory markets are as soon as once more taking the ‘half-full’ method and absolutely anticipating a multi-trillion greenback stimulus initially of subsequent yr with a Blue, Democratic sweep.
That is denting the greenback and pushing bond yields larger because the reflation commerce gathers tempo. We’ve seen elevated bear steepening in fastened revenue lately, the place lengthy bond yields rise quicker than shorter-term yields. In truth, the ten-year US Treasury bond yield hit ranges earlier as we speak not seen for the reason that begin of June.
EUR/GBP drops into robust help
With the constructive Brexit information (effectively, the truth that talks are resulting from resume after every week of unfavorable headlines!), the Pound has reacted strongly with cable surging previous the mid-October excessive of 1.3083 and the 50% retracement of the September decline at 1.3079. There now appears to be a transparent path to 1.32 after vary buying and selling over the previous few weeks.
Equally, EUR/GBP has moved abruptly decrease as we speak and is buying and selling on its 100-day Transferring Common and into robust October help. Extra Brexit optimism is now wanted to interrupt this confluence zone simply above 0.90, so bears can push decrease in direction of 0.89.
USD/JPY by way of 105
As US bond yields rise, so USD/JPY falls with technical promoting by way of the 105 stage spurring elevated bearish momentum. Destructive sentiment round King Greenback and the prospects for elevated US authorities borrowing have sparked the selloff in bonds.
The downward trajectory has taken the pair to recent one-month lows, however the greatest sell-off since August must consolidate these lows after such a robust transfer. Additional weak point ought to problem final month’s swing lows across the 104 mark.