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Talking Points:

The British Pound outperformed in Asia Pacific trade, building on yesterday’s gains inspired by seemingly brighter prospects for a Brexit deal. Official reports now say that Prime Minister Theresa May will travel to Brussels to meet with European Commission President Jean-Claude Juncker and top EU Brexit negotiator Michel Barnier today.

This allegedly follows a last-minute deal on the fate of the EU/UK border that will soon bisect the island of Ireland. The boundary was all but negligible when both Northern Ireland – a part of the UK – and the independent Republic of Ireland were both EU member states. Failure to secure agreement on this score brought down an almost-there Brexit accord earlier this week.

The Japanese Yen traded broadly lower as Asia Pacific stocks followed Wall Street higher, sapping demand for the standby anti-risk currency. The Swiss Franc also fell in what might have reflected its frequent role as regional Europe haven asset, with demand ebbing amid hopes for a Brexit breakthrough. The New Zealand Dollar turned higher, retracing some of yesterday’s outsized losses.

US labor market data enters the spotlight later in the day. Analysts expect a 195k nonfarm payrolls increase in November, marking a bit of a slowdown from the 261k added in October. The jobless rate is seen holding steady at 4.1 percent, matching a 17-year low. These headline figures seem unlikely to mean much for the US Dollar however considering a rate hike is almost fully priced in for this month’s FOMC meeting.

Average hourly earnings data may see a response however. The on-year growth rate is expected to hit 2.7 percent after sliding to a nine-month low of 2.4 percent last month. A brisk rebound in wage inflation might bolster the likelihood of a steeper rate hike cycle in 2018, even before any fiscal stimulus like tax cuts and infrastructure spending are accounted for. That may send the greenback upward.

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Asia Session

Pound Soars on Brexit Deal Hopes, US Dollar May Rise on Wages Data

European Session

Pound Soars on Brexit Deal Hopes, US Dollar May Rise on Wages Data

** All times listed in GMT. See the full DailyFX economic calendar here.

--- Written by Ilya Spivak, Currency Strategist for

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