Forex today: UK Parliament vote sends PM May back to Brussels for 11th hour concessions on backstop
- Forex today was somewhat subdued as investors braced for the key events taking place that started with Brexit voting, and today Aussie CPI before Fed, (and key US data), and Sino/US trade talks tomorrow.
The DXY drifted higher from low 95.60s to 95.87. The US 10yr treasury yield fell from 2.74% to 2.71%, while the 2yr yield fell from 2.58% to 2.56%.
Looking ahead to tomorrow's Fed, there is very little chance of a hike and just a 1% chance assigned to the March meeting, and a 20% chance to the June meeting.
The main focus was on Brexit for today. PM May will head to Brussels with The Commons majority backing her as the Back Stop proposal is ditched and Article 50 is left as is following the votes. Sterling dropped throughout the event.
Currency action:
Analysts at Westpac broke down the currency action from overnight as follows:
"EUR/USD ranged sideways between 1.1410 and 1.1450. GBP/USD was a little skittish again but overall little changed around 1.3160 ahead of the British parliament’s votes on several amendments to the proposed Brexit legislation. It finally made a clear move lower (to around 1.3100) on rejection of the Cooper amendment aimed at delaying Brexit.
USD/JPY is flat on the day, around 109.35. AUD/USD ranged between 0.7145 and 0.7175. Spot iron ore (Mysteel) extended its steep rally by 1.8% to $80.25/tonne, the first reading above $80 since April 2017. Next week’s lunar new year holidays in China could be a challenge to the durability of this rally. NZD/USD ranged between 0.6830 and 0.6860. AUD/NZD probed slightly lower – to 1.0450, which is a multi-week low."
Key notes from overnight:
- Wall Street mixed and Apple's earnings a relief
Key events ahead:
- When are the Australian CPIs and how could they affect the AUD/USD?