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Pound Drops as Brexit Timeline Emerges, US Dollar Eyes ISM Data

Pound Drops as Brexit Timeline Emerges, US Dollar Eyes ISM Data

Ilya Spivak,

Talking Points:

  • British Pound declines as UK PM May establishes Brexit processtimeline
  • Aussie, NZ Dollars retrace after Deutsche Bank inspired gains on Friday
  • US Dollar may rise if supportive ISM data boosts Fed rate hike outlook

The British Pound declined gapped lower at the open of the trading week after UK Prime Minister Theresa May pledged to get on with making Brexit a reality, pledging to trigger Article 50 of the Treaty of Lisbon by the end of the first quarter of 2017. Doing so will formally begin a two-year debate on the severing of the existing UK/EU relationship and the establishment of a new one.

The Australian and New Zealand Dollars likewise declined in a move that seemed corrective following Friday’s strong advance. That move tracked a broad-based recovery in risk appetite after Agence France-Presse reported that Deutsche Bank (DB) is close to settlement on a $5.4 billion fine with the US Department of Justice (DOJ), a far more manageable sum than the $14 billion initially demanded by regulators.

Deutsche-related news flow may remain in the spotlight as CEO John Cryan travels to the US to finalize negotiations. September’s ISM Manufacturing survey takes top billing on the data docket, with consensus forecasts suggesting the US factory sector returned to growth last month after an unexpected contraction in August. An upbeat result that bolsters Fed rate hike speculation may broadly boost the US Dollar.

Losing money trading in the FX market? This might be why.

Asia Session

GMTCCYEVENTACTEXPPREV
22:30AUDAiG Perf of Mfg Index (SEP)49.8-46.9
23:00AUDCoreLogic House Px (MoM) (SEP)1.0%-1.1%
23:50JPYLoans & Discounts Corp (YoY) (AUG)2.11%-2.25%
23:50JPYTankan Large Mfg Index (3Q)676
23:50JPYTankan Large Mfg Outlook (3Q)686
23:50JPYTankan Large Non-Mfg Index (3Q)181819
23:50JPYTankan Large Non-Mfg Outlook (3Q)161817
23:50JPYTankan Large All Industry Capex (3Q)6.3%6.5%6.2%
23:50JPYTankan Small Mfg Index (3Q)-5-5-5
23:50JPYTankan Small Mfg Outlook (3Q)-6-6-7
23:50JPYTankan Small Non-Mfg Index (3Q)000
23:50JPYTankan Small Non-Mfg Outlook (3Q)-2-2-4
00:00AUDMelbourne Institute Inflation (MoM) (SEP)--0.2%
00:00AUDMelbourne Institute Inflation (YoY) (SEP)--1.2%
00:30JPYNikkei Japan PMI Mfg (SEP F ) --50.3
05:00JPYVehicle Sales (YoY) (SEP)--5.7%

European Session

GMTCCYEVENTEXPPREVIMPACT
07:15CHFRetail Sales Real (YoY) (AUG)-1.7%-2.2%
07:30CHFPMI Mfg (SEP)51.851
07:50EURMarkit France Mfg PMI (SEP F) 49.549.5
07:55EURMarkit/BME Germany Mfg PMI (SEP F) 54.354.3
08:00CHFTotal Sight Deposits (SEP 30)-517.2b
08:00CHFDomestic Sight Deposits (SEP 30)-444.6b
08:00EURMarkit Eurozone Mfg PMI (SEP) 52.652.6
08:30GBPMarkit UK PMI Mfg SA (SEP)52.153.3

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3
EUR/USD1.10171.11151.11751.12131.12731.13111.1409
GBP/USD1.28051.28911.29321.29771.30181.30631.3149

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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