This morning, markets continue to shun safe havens, pushing the dollar and yen lower despite the prospect of a US rate hike next week. Demand for safe havens continue to weaken with many yen pairs hitting their highest levels since May.
The EUR/JPY is one of the strongest performers with the pairs setting up to test the May highs and challenge 133.00. The AUD/JPY is hitting its fourth solid gain in a row as markets slip comfortably into ‘risk-on’ mode. The USD/JPY is making gains again as well, with the July highs the next target.
The GBP/JPY is shooting higher, which is curious given the government’s perilous negotiating position on Brexit. The GBP/USD is unchanged this morning though, after surging above 1.3200 yesterday. The EUR/GBP slipped lower yesterday, but those losses have been mostly covered by today’s advances.
Other dollar pairs are on the front foot, with the EUR/USD making additional gains and AUD/USD setting up to challenge 0.7300.
The USD/CAD continues to weaken, with 1.2900 holding as support for now.
The USD/CHF resistance broke yesterday though, with the pair trading below 0.9600 for the first time since April.
Today we have a slew of European manufacturing PMI and services PMI data, starting with French data at 08.15, German data at 08.30 and European data at 09.00.
UK public sector net borrowing is at 09.30.
Canadian CPI and retail sales are at 13.30.
Investors remain curiously sanguine about Brexit plans breaking down, with Theresa May ambushed by EU leaders rejecting her Chequers plans yesterday.
Perhaps all the bad news is already priced in, but it’s also possible that most investors are as confused as the next man on Brexit and therefore may not fully priced in the dangers of the current position.
As such, after a period of decline, there could be some upside for the EUR/ GBP.