Sterling Falls as Johnson Moves to Suspend Parliament; Dollar Up
AUGUST 28, 2019
The U.S. dollar is stronger against most of its counterparts as increased trade worries, more recession signals, and British politics weakened many of the dollar’s rivals.
Equities turned lower during yesterday’s session as yield curves once again inverted which is a historic warning sign a recession may be on the horizon. Multiple financial media outlets are sighting a growing disillusionment among traders who see a China-US trade deal as unlikely in the near or medium-term, further souring the mood. There is no economic data set for release today that could lift the clouds. Instead, we will rely on a few Fed speakers for dollar moving headlines. In all likelihood, developments abroad will dictate trade during today’s session.
The Australia and New Zealand dollars continue to be under pressure as trade tensions grow. The Kiwi fell to its weakest level since September 2015.
What to Watch Today…
- No major events scheduled for today.
Complete Economic Calendar can be found here.
EUR/USD continues to hold tight ranges, sound familiar? The pair remains near two-year lows and was unable to pop higher even on positive Italian headlines. It appears that the anti-establishment Five Star Movement and the Democratic party look to have reached an agreement to form a new government. The deadline is in a few hours so we will watch for any changes that might move the currency.
The British pound fell sharply overnight, falling over a percent in under an hour after Prime Minister Boris Johnson asked the Queen to suspend parliament for a month. The move, called proroguing, is a transparent attempt to hinder efforts of lawmakers to stop a no-deal Brexit and found immediate, harsh criticism from both sides of the aisle. Speaker of the House of Commons, John Bercow, called it a “constitutional outrage.” The Queen is on holiday in Scotland but Bloomberg reports that the Privy Council, a group of senior politicians who advise the Queen will confirm the decision later today. In short, a no-deal Brexit has become slightly more likely.