Brexit news gives GBP another boost
The pound traded higher in early trading Monday following weekend news reports that an all-UK customs deal would be written into Brexit terms. GBP/USD touched 1.3026, just shy of Friday’s 10-day high of 1.3041, and still holding below the 100-day moving average at 1.3040. That moving average has capped the pair on a closing basis since October 17.
GBP/USD Daily Chart
Dollar holds on to gains
Elsewhere, USD/JPY clung on to Friday’s gains above 113 as 10-year US yields held steady at 3.2%, after jumping the most in a month after the US jobs report on Friday. EUR/USD also posted gains on the back of the Brexit news, and the gains in both GBP and EUR, which combined make up about 70% of the dollar index, pushed the index marginally lower.
China pledges to open up markets
Speaking at an imports Expo, China’s President Xi reiterated the government’s pledges to open up local markets, widening access to financial markets and services, accelerate opening the education, telecom and cultural sectors and further open the agricultural and manufacturing sectors. It wants to accelerate trade talks with Europe, Japan and South Korea (though no mention of the US).
China’s goods imports is expected to top $30 trillion in the next 15 years, while services imports are seen exceeding $10 trillion in the same period. There was muted reaction in markets to the comments, though the US dollar firmed up slightly. USD/CNH rose for the first time in three days and is keeping its foothold above the 55-day moving average at 6.8859.
USD/CNH Daily Chart
Services PMI readings on tap
The Europe data slate is relatively barren, with just UK Markit services PMI and Euro-zone Sentix investor confidence on tap. The US ISM non-manufacturing PMI is expected to show a similar direction to the manufacturing one, namely a lower reading to 59.5 from 61.6. The Markit services PMI is also scheduled, and seen holding steady at 54.7.
The full MarketPulse data calendar can be viewed at https://www.marketpulse.com/economic-events/