Sterling failed to sustain highs with expectations that new UK Brexit proposals would be rejected by the EU..
Quarter-end position adjustment had a significant impact during Monday with choppy trading.
The dollar overall maintained a strong tone with the trade-weighted index at 28-month highs with EUR/USD at fresh 28-month lows after a decline in German inflation.
The Australian dollar was undermined by a Reserve Bank interest rate cut. Equity markets made net gains amid hopes for US-China trade progress.
Precious metals declined sharply as a firm dollar eroded support with gold sliding to 7-week lows. Oil prices were also undermined by on-going demand concerns.
European growth concerns undermined Scandinavian currencies. Cryptocurrencies recovered ground.
Latest IMF data indicated that the dollar’s share of global currency reserves had declined to the lowest level since the end of 2013 which indicated a lack of official US support. The dollar overall held a strong tone, however, with other major currencies continuing to lack support. EUR/USD edged lower to 1.0880 on Tuesday with the dollar index at fresh 28-month highs.
UK second-quarter GDP was confirmed at -0.2% in the final reading with annual growth revised marginally to 1.3% from 1.2%. Business investment declined slightly while August consumer lending data was slightly weaker than expected.
Opposition parties stated that they would not call a no-confidence vote in the government this week as it could increase the risk of a ‘no-deal’ Brexit. Sterling moved higher on speculation that the UK government could make a fresh offer to the EU this week, although month-end position adjustment is also likely to have been an important element in triggering Sterling gains. After posting gains into the London fix, the UK currency quickly retreated once again, and GBP/USD dipped back below 1.2300 with GBP/EUR settling above 1.1280.
There were further reports that the government’s Northern Ireland customs plans would be released by Thursday although there were reports of strong opposition from the Irish and EU governments to the leaks. Sterling was unable to make headway with markets expecting PMI data to record further manufacturing contraction and GBP/USD continued to trade below 1.2300.
|07:30||CHF Retail Sales (Y/Y)(AUG)||-||1.40%|
|08:30||CHF SVME PMI(SEP)||-||47.2|
|08:45||Markit/ADACI Mfg PMI(SEP)||48.5||48.7|
|08:55||EUR German Manufacturing PMI (M/M)(SEP)||-||43.5|
|09:30||GBP PMI Manufacturing(SEP)||-||47.4|
|10:00||Euro-Zone CPI (Y/Y)(SEP)||1.00%||1.00%|
|13:30||CAD GDP (M/M)(JUL)||0.10%||0.20%|
|14:30||CAD RBC Manufacturing PMI(SEP)||-||49.1|
|14:45||USD Manufacturing PMI(SEP)||-||50.3|
|15:00||US Manufacturing ISM(M/M)(SEP)||-||49.1|
|15:00||USD Construction Spending (M/M)(AUG)||0.30%||0.10%|