Sterling was again hampered by an absence of positive political rhetoric..
The Euro dipped sharply lower as much weaker than expected PMI data reinforced concerns over the outlook and bond yields faded again.
The dollar made net gains as a lack of confidence in European and commodity currencies provided US support by default despite subdued US PMI data.
Sterling was again hampered by an absence of positive political rhetoric. US equity markets recovered from initial losses amid some hopes for US-China trade progress, although underlying caution prevailed.
Oil prices registered slight net losses in choppy trading with underlying Middle East tensions limiting selling pressure. Precious metals secured net gains as underlying demand remained firm with a sharp advance for silver.
ECB President Draghi reiterated that Euro area growth momentum had slowed markedly and more than expected previously and forward indicators did not show convincing signs of a recovery. Draghi again called for a coherent strategy to complement monetary policy and incoming head Lagarde also stated that the outlook will be good if there is a coherent strategy. ECB member Knot stated that there is room to consider additional spending.
Political factors were unable to support Sterling during Monday. EU chief negotiator Barnier stated that UK proposals on the Northern Ireland backstop are unacceptable and it was hard to see how a solution could be reached, but talks will continue. There was slightly more optimistic rhetoric from German Foreign Minister Maas who stated that UK proposals were a step forward. Irish Premier Varadkar and EU Council President Tusk both stated that backstop proposals were not good enough.
The UK Supreme Court will deliver its verdict on Tuesday whether parliament’s suspension was lawful and any decision against the government would inject further uncertainty with underlying tensions continuing to increase.
EUR/GBP advanced to near 0.8850 despite a softer tone elsewhere while GBP/USD retreated to lows below 1.2420. The UK currency secured marginal gains on Tuesday as global risk appetite held steady with political developments remaining a key focus.
|09:00||German Business Expectations(SEP)||91.5||91.3|
|09:00||IFO - German Current Assessment(SEP)||98.6||97.3|
|09:00||German IFO Business Climate Index(SEP)||95.1||94.3|
|09:30||GBP Public Sector Net Borrowing(AUG)||-||-1.97B|
|10:55||RBA Assistant Gov Lowe Speaks||-||-|
|11:00||GBP CBI Industrial Trends Orders (SEP)||-||-13|
|14:00||US House Price Index (M/M)(JUL)||-||0.20%|
|15:00||USD CB Consumer Confidence(SEP)||-||135.1|
|23:45||NZD Trade Balance (M/M)(AUG)||-||-685M|
|23:45||NZD Trade Balance (Y/Y)(AUG)||-||-5.460M|