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TALKING POINTS – BRITISH POUND, BREXIT, US DOLLAR, FED, G20, TRADE WAR

  • Aussie, NZ Dollars rise with APAC stocks on G20-linked optimism
  • British Pound broadly lower as Brexit deal hopes continue to fizzle
  • US Dollar may rise as Fed comments boost rate hike expectations

The sentiment-linked Australian and New Zealand Dollars rose in Asia Pacific trade, echoing an upbeat mood on regional stock exchanges. Like yesterday, this seems to reflect hopes for de-escalation in the US vs. China trade war after presidents Trump and Xi meet at the G20 summit this weekend.

BRITISH POUND DOWN AMID BREXIT DEAL TURMOIL

The British Pound underperformed, accelerating downward toward the end of the session and just ahead of the opening bell in Europe. That seems linked to dimming prospects for passing the Brexit deal championed by Prime Minister Theresa May.

A group of prominent economists said in a joint report that Ms May’s proposal will lower UK GDP by as much as 5.5 percent per capita versus staying within the EU, while a “no-deal” Brexit could trim as much as 8.7 percent. Separately, Donald Trump said the deal on offer might hurt plans for a US/UK trade pact.

US DOLLAR MAY RISE ON FED COMMENTARY

Looking ahead, Fed-speak is likely to overshadow an uneventful economic data docket. Comments from Vice Chair Richard Clarida may prove to be most market-moving after his earlier remarks seemed to stoke speculation that the US central bank might be looking to slow the pace of interest rate hikes.

Mr Clarida said the Fed is monitoring external developments for possible headwinds but did not add Chair Powell’s oft-repeated caveat that such things will only impact policy if they alter progress on domestic objectives. The US Dollar may rise if Clarida clarifies this in favor of the status quo, as seems likely.

See our free guide to learn how to use economic news in your trading strategy!

ASIA PACIFIC TRADING SESSION

Asia Pacific Trade Economic Calendar

EUROPEAN TRADING SESSION

Pound Down on Brexit Deal Tumult, US Dollar May Rise on Fed-Speak

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

FX TRADING RESOURCES

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

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