Risk appetite strengthened on hopes that the US and China could make headway in trade talks.
Risk appetite strengthened on hopes that the US and China could make headway in trade talks. Bond markets dipped slightly with the 10-year yield just above 1.50%.
Equities made net gains, although Chinese and Hong Kong bourses traded lower amid political fears.
The US dollar was underpinned by a lack of attractive alternatives with the trade-weighted index at 4-week highs.
Commodity currencies remained generally on the defensive with AUD/USD dipping to near 10-year lows while weak data hampered Sterling.
The Euro was undermined by dovish comments from next ECB President Lagarde and EUR/USD dipped to near 2-year lows below 1.1050.
Gold was undermined by firmer risk conditions and a stronger dollar, but precious metals found solid support on dips. Scandinavian currencies remained under pressure with further losses against the dollar.
The Dutch Foreign Minister stated that serious Brexit talks had taken place on Wednesday, but that they were not there yet. The UK government announced that the pace of negotiations would intensify next week. Opposition Labour Party leader Corbyn stated that he will try on Tuesday to prevent parliamentary prorogation and underlying political tensions remained intense.
Market caution persisted given a lack of certainty over developments and the on-going risks that the UK would leave the EU without any deal. GBP/USD settled just below 1.2200 while GBP/EUR retreated slightly to near 1.100.
UK second-tier data releases were weak with the Lloyds business barometer sliding to 1 for August from 13 the previous month and the lowest reading since December 2011. Consumer confidence declined to -14 from -12 and the joint weakest reading since mid-2013. GBP/USD traded below 1.2200 on Friday with GBP/EUR near 1.100. There will be wariness over potentially choppy month-end trading during Friday, especially around the London fix ahead of the European close.
Economic Calendar
| Expected | Previous | ||
|---|---|---|---|
| 07:00 | EUR German Retail Sales (M/M)(JUL) | -1.30% | 3.00% |
| 07:00 | EUR German Retail Sales (Y/Y)(JUL) | - | -1.40% |
| 08:00 | CHF KOF Leading Indicator(AUG) | 94.9 | 97.1 |
| 09:00 | Unemployment Rate(JUL) | 9.60% | 9.70% |
| 09:30 | GBP Consumer Credit(JUL) | 1.000B | 1.046B |
| 09:30 | GBP Mortgage Approvals(JUL) | 66.37K | 66.44K |
| 09:30 | GBP Net Lending to Individuals (M/M) | 4.7B | 4.8B |
| 10:00 | CPI (EU Norm) Prelim MM(AUG) | 0.30% | 0.00% |
| 10:00 | CPI (EU Norm) Prelim YY(AUG) | - | 0.40% |
| 10:00 | CPI (EU Norm) Final YY*(AUG) | 0.40% | 0.30% |
| 10:00 | CPI (EU Norm) Final MM*(AUG) | - | -1.80% |
| 10:00 | Euro-Zone Core CPI (Y/Y)(JUL 01) | 1.00% | 0.90% |
| 10:00 | Euro-Zone CPI (Y/Y)(AUG) | 1.00% | 1.00% |
| 10:00 | Euro-Zone Unemployment Rate(JUL) | 7.50% | 7.50% |
| 11:00 | GDP Prelim QQ | - | 0.10% |
| 11:00 | GDP Prelim YY | 0.00% | -0.10% |
| 13:30 | USD PCE Core Price Index(M/M)(JUL) | 0.20% | 0.20% |
| 13:30 | USD PCE Core Price Index (Y/Y)(JUL) | 1.70% | 1.60% |
| 13:30 | USD Personal Income (M/M)(JUL) | 0.30% | 0.40% |
| 13:30 | USD Personal Spending (M/M)(JUL) | 0.50% | 0.30% |
| 13:30 | CAD GDP Annualized (Q/Q) | 3.00% | 0.40% |
| 13:30 | CAD GDP (M/M)(JUN) | 0.10% | 0.20% |
| 13:30 | CAD GDP (Y/Y) | - | 1.32% |
| 13:30 | CAD RMPI (M/M)(JUL) | 1.60% | -5.90% |
| 14:45 | USD Chicago PMI(AUG) | 47.5 | 44.4 |
| 15:00 | USD Michigan Consumer Sentiment(AUG 01) | 92.1 | 92.1 |
| 18:00 | USD Baker Hughes US Oil Count | - | 754 |