Reservations over US-China trade policies continued to unsettle risk appetite.

Strong domestic consumer confidence data helped support the US dollar, although global factors dominated price action.

Reservations over US-China trade policies continued to unsettle risk appetite with a further flow of funds into US Treasuries with 10-year yields at 20-month lows.

Lower yields continued to support the yen with the Swiss franc also reversing initial losses.

US equities were undermined by on-going trade fears with net losses for global bourses. Political reservations continued to undermine the Euro and Sterling.

Oil prices were protected to some extent by difficulties at the Cushing complex, but demand concerns eventually eroded support with net losses

The latest UK mortgage approvals data strengthened to the highest level for over 2 years which suggested resilience in the housing sector despite on-going political uncertainty. There was no Sterling support from the data and political sentiment continued to dominate markets. There were further concerns that a new Conservative Party Prime Minister would push towards promoting a ‘no-deal’ Brexit.

Underlying concerns over severe domestic political stresses remained important with the Labour Party Brexit stance also in focus. After a brief test of 1.2700, GBP/USD retreated to near 1.2650 as sentiment remained negative while GBP/EUR settled near 1.1330 after hitting support around 1.1300.

According to the latest CBI survey, services-sector companies were negative on the outlook as political uncertainty continued to deter activity, although employment trends remained firm. The fragile tone in global risk and unease over global trade policies also remained net negative factors for Sterling as GBP/USD traded just above 1.2650 on Wednesday.

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