Morning Markets: GBPUSD hovers above the 127.0 trapdoor
- Germany: Factory Orders (0600 GMT)
- US: Initial Jobless Claims (1230 GMT)
GBPUSD once again dipped through the 127.0 handle Thursday morning in the hour before the European open before finding some support at the 126.90 area after prime minister Theresa May's weekend 'hard' Brexit speech was reinforced by a tough-talking address to the Conservative faithful at the annual party conference.
Centering her talk on the need to salve the wounds in the social contract, May turned both barrels on those who had profited from the financial crisis of 2008/9 with big business in the firing line over a range of issues including zero-contract hours and exploiting near-monopoly conditions. QE also came under attack and with calls for UK companies to list the number of foreign workers on their books also emerging at this week's conference, the Brexit legacy is beginning to worm its way through the UK social and political system with the shift towards 'hard' Brexit looking almost immovable.
Dollar strength will impact sterling further tomorrow if the nonfarm payrolls delivers an upside surprise and USDJPY is also threatening to go on the tear as the pivotal pair stretches towards 104.0. Yen strength has waned as the implications of the Bank of Japan's effective quantitative-easing taper move at last month's big meeting begins to infiltrate markets. It's cheered export-led Nikkei nevertheless which was looking at a half-percentage point on-day rise and there is still nothing to halt the Hang Seng rise which continues unabated from Q3's stellar performance:
Dollar strength looks set for the foreseeable in any case after a big ISM print Wednesday and as the probability of a Federal Reserve rate hike before the end of the year continues to grow.
The oil rally is still enjoying some momentum from last week's Algiers deal, but US benchmark WTI may have reached a natural ceiling at the $50/barrel area with European benchmark Brent still stretching out towards the $52/b zone. Gold meanwhile continues to look over its shoulder at the $1,250/oz zone.
- Oil prices hit session highs on Wednesday, rising to their highest since June
- In Asian trade, US crude futures were down 0.66% at $49.50/barrel
- Asian markets all rose in early trade bolstered by the rise in oil prices
- The ASX200 closed up 0.55% to 5483.0, while the All Ords was up by the same
- Australia's August trade deficit came in at $A2.01bn, vs $A2.30bn expected
- It is a holiday in China today
- Twitter is said to have told potential buyers it will conclude negotiations by October 27
- Better-than-expected US data was behind a rise in USDJPY
- The Aussie dollar was little changed at US76.12¢ after Australia's trade data
From the Floor
May's turn. "The politicisation of monetary policy in the UK may see a less dovish BoE meeting in November," says Hardy.
Precious ground. "Gold is still holding more or less at around the level it was yesterday morning so maybe we are seeing a bit of consolidation," says Hansen.
Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.
The focus will be on Germany's factory orders today, which, despite an upbeat mood is expected to show a fall in August, writes James Picerno.
Time to yield
The reach for yield era is nearing an end as central banks accept the limits of what they can do, says John J Hardy in his Quarterly Outlook.
USDJPY confirmed its break higher two days ago and continues to rise, writes the team at Saxo APAC Sales Trading.
More, not less
The retreat to isolationism is deeply damaging to the global economy and anti-trade agendas must be resisted at all costs, writes Stephen Pope
Morning Markets goes out on the TradingFloor platform at 0700 GMT, Monday to Friday.
Click here to make sure you're up to date with the latest developments.