1. Forex Preview: GBP Recovers
The GBP gained more than 0.5% today wildly recovering overnight on news that PM Johnson seems not to be able to push through his no-deal Brexit. Yesterday, British lawmakers defeated Prime Minister Boris Johnson’s government in a vote to seize control of the parliamentary business, moving closer to blocking a no-deal Brexit. UK PM Johnson had previously threatened to call for snap elections in such a scenario so we would definitely stay tuned to see what happens. The USD meanwhile gave some of its strength back after the negative ISM but still remains in place to recover. Elsewhere, the EUR: enjoyed a mild turnaround in sympathy with the GBP and the USD weakness, we would watch for the data out of the EU this morning for further input.
2. US ISM Falls Below 50
Yesterday’s US ISM figures fell below 50 to 49.1% in August from 51.2% in July, signalling a contraction in manufacturing activity. This is the lowest reading since January 2016 and a clear sign that the U.S. manufacturing sector has been hammered by U.S.-China trade tensions. The index has fallen nearly 10 points since the trade war began last summer.
3. All Eyes on the BoC
Today, investor interest will turn to the latest BoC Interest Rate Decision for direction on the CAD. There is a clear difference of opinion within central banks meanwhile, with the Fed and the ECB taking a completely different stance on how strongly to react to the current situation, which means that both central banks may disappoint market expectations on their next meetings.
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4. Oil Prices Wallow, Gold Set to Edge Higher
Oil prices recovered some ground on Wednesday after touching their lowest in close in a month during the previous session on negative US data and global economic concerns. Spot gold dipped slightly this morning after rising 1% in the previous session, with prices hovering near a more than six-year high on heightened fears of a global recession.
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*Financial Times Sep 4, 2019 03:07 AM ET
**Reuters Sep 4, 2019 3:53 AM ET
***CNBC Sep 4, 2019 2:48 AM ET
****Investing Sep 4, 2019 05:20 AM ET