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Asia Pacific Market Open – British Pound, Brexit, Crude Oil, Australian Dollar

  • Stock and foreign exchange markets diverged in the final trading day of a rather shaky month
  • British Pound[1] rose on Brexit deal hopes while crude oil[2] prices declined on record US output
  • The Australian Dollar may be at risk to a smaller trade surplus amidst soft Chinese growth

We just released our 4Q forecasts for currencies like the US Dollar in the DailyFX Trading Guides page[3]

On Wednesday, global stock markets could have been characterized as behaving jubilantly. The Nikkei 225, DAX and S&P 500[4][5][6] climbed 2.16%, 1.42% and 1.09% respectively. This allowed them to trim some of their shaky performance in October. Generally, stocks were under fire last month as bigger fundamental themes such as Fed tightening, emerging markets fears and political uncertainty soured the mood in investors.

Despite the ‘risk on’ behavior in the last trading day of October, foreign exchange markets behaved rather oppositely. Pro-risk currencies such as the Australian and New Zealand Dollars largely underperformed while the anti-risk Japanese Yen[7] soared. This may have been due to lackluster Australian CPI data and softer gauges of China’s industrial sector during APAC trade[8].

This placed those aforementioned currencies in a tough spot to reverse their progress ahead of European and US trading sessions. One FX major that shined above all was the British Pound, bolstered by signals that a Brexit deal could be reached by November 21st[9]. Meanwhile sentiment-linked crude oil prices also diverged with

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