Check out the brand new DailyFX trading forecasts[1] for Q3
MARKET DEVELOPMENTS – NO DEAL BREXIT RISK WEIGHS ON GBP[2]
Marginal losses for US equity futures to begin the week, following a mildly soft lead from European bourses in a what has been a relatively quiet session from an equity point of view.
GBP: The Pound fell to a fresh 11-month low this morning[3], printing a low of 1.2923 after comments made by the UK Trade Minister, Fox, who stated that a “no deal” Brexit is the most likely scenario with a 60-40 chance. This had compounded the views from BoE Governor Carney last week, who noted that the possibility of a no deal is uncomfortably high. Option premium to protect against a decline in GBP has continued to rise with risk reversals at the lowest since early 2017.
EUR: The Euro saw a close below 1.1575, which now opens up a potential move towards the 2018 low (1.1508).[4] Alongside this, the 12-day momentum remains negative, consequently reinforcing the bearish sentiment in the pair. As the price continues to dip, demand for Euro[5] puts (protection against further declines) have increased. Italian politics beginning to present risks for the Euro amid comments made by Deputy Prime Minister Di Maio who stated that respecting the EU’s fiscal rules is not a priority as Italy look to provide a framework for its 2019 budget.
CAD: Slight concerns for CAD[6] bulls this morning amid reports that Saudi Arabia has expelled Canada’s ambassador and frozen new trade deals with the country[7] following Canada’s statements calling for release
