News

Sterling Surrenders Partial Gains, Brexit Negotiations Eyed

GBP

The British pound advanced against rivals on Friday, supported by optimism over an orderly Brexit. The European Union Chief Negotiator Michel Barnier and the British Negotiator Stephen Barclay had a constructive meeting in Brussels. The Sterling was finding support from the headlines following the Irish and British Prime ministers meeting on Thursday, where they reinforced the possibility of reaching a deal. The Brexit negotiations will continue today, where Boris Johnson is hoping for a deal that the European leaders will agree on later this week in the EU summit. The GBPUSD is currently trading slightly below $1.26, and the GBPJPY is hovering above 136.

USD

The dollar index, which measures the greenback against a basket of major currencies edged higher during the Asian session to 98.53, recovering from heavy losses incurred late last week. The trade truce reached during the latest trade talks between China and the United States could buy the Federal Reserve more time to assess the economic situation before going further with lowering interest rates. President Donald Trump indicated that despite reaching part of a deal on trade, the Fed should continue easing the monetary policy. The probability of cutting interest rates on the 30th of October meeting remains elevated. The US 10-year yields edged higher to 1.767%, the USDJPY traded near 108.30, and the EURUSD tumbled to $1.1013.

Metals

Gold prices tumbled to a two-week low on Friday, as investors shifted to riskier assets upon optimism over trade between China and the United States. The trade talks held on Thursday and Friday in Washington were concluded with phase 1 deal, which drove risk appetite higher. Despite the latest development, both ends still have a lot to do to ensure the end of the trade clash. The price of a gold ounce dropped to $1474 but recovered partial losses ahead of close and during the Asian session to trade at $1490.

Oil

Oil prices surrendered partials gains after finishing higher for two-consecutive days. Oil benchmarks found support from the trade truce reached between China and the United States and elevated geopolitical tensions in the Gulf after an Iranian oil tanker was hit. However, the missing details of phase 1 of the trade deal and the fact that there is more to be done to put an end to the trade clash pushed oil lower. The West Texas Intermediate crude futures dropped to $53.95, and Brent futures tumbled to $59.61.

Major Economic Events

GMT Country Event Expectation Previous

9:00

EU

Industrial Production (MoM) (Aug)

0.3%

-0.4%

18:00

US

Federal Budget Balance

 

-200


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