In the absence of major economic releases during today’s European session trading, forex markets were focused on upcoming data, a central banking conference set to take place tomorrow and developments on the political front, in particular Brexit and the US tax reform. Sterling was the worst performing major currency.
The dollar’s index against a basket of currencies was 0.1% higher at 1520 GMT. On Friday, it hit 94.26, its lowest since October 26 as developments on the US tax front failed to please market participants. Beyond the tax story, Tuesday’s producer prices and Wednesday’s inflation and retail sales figures (all for the month of October) will be gathering attention in the US. Rising yields have provided some support to the greenback. The 10-year Treasury yield last stood at 2.39%. Last week, it fell to 2.30% at its lowest, a level not seen since October 19.
Dollar/yen was flat at 113.52, standing at a distance from last Monday’s eight-month high of 114.72. Euro/dollar traded marginally higher at 1.1667. The pair rose in the three preceding trading days.
The ECB will tomorrow be hosting a central banking conference in Frankfurt. ECB President Mario Draghi, Fed Chair Janet Yellen, BoJ Governor Haruhiko Kuroda and BoE Governor Mark Carney will be participating in a panel discussion titled “At the heart of policy: challenges and opportunities of central bank communication”. The discussion is scheduled to take place at 1000 GMT.
The Sunday Times reported over the weekend that 40 Conservative MPs have agreed to sign a letter of no-confidence in Prime Minister Theresa May. This is eight short of the number needed for a party leadership contest which would put May’s position as prime minister in doubt. This latest news comes after the recent resignations of Priti Patel and Michael Fallon, which were seen as weakening May’s government and further add to political uncertainty in the UK at a time when Brexit negotiations are at a focal point. Adding to this, foreign secretary Boris Johnson and environment secretary Michael Gove seem to have sent a joint private letter to May, urging her to push towards the direction of a “hard” Brexit. Their action was met with bitterness by those advocating a “soft” Brexit deal with the EU.
Pound/dollar was 0.6% lower at 1.3108. At its lowest it touched 1.3060, a level not experienced since November 6. Sterling was also weaker versus the euro with euro/pound last up by 0.6% and eyeing the 0.89 handle. At its highest the pair reached 0.8923, this being a 10-day peak. The British currency was notably down relative to the yen as well, with pound/yen last trading down by 0.6% at 148.88 after recording a more than three-week low of 148.04 earlier in the day.
Commodity-linked currencies, including the loonie, aussie and the kiwi all lost ground relative to the greenback: dollar/loonie was higher by 0.3% at 1.2715, aussie/dollar was lower by 0.3% at 0.7641 and kiwi/dollar down by 0.35% at 0.6904.
In commodities, gold traded higher by 0.1% at $1,277.87 an ounce. WTI was 0.2% up at $56.87 a barrel and Brent crude lower by 0.2% at $63.40 per barrel, both remaining close to last week’s more than two-year high levels.