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Collinson FX:October 23, 2019 - Brexit and the chaos of indecision.

by Collinson FX 23 Oct 2019 05:46 PDT 24 October 2019
Nacra 17 sailing past the Tamaki Yacht Club on the Waitemata Harbour ahead of the 2019 World Championships. The 49er, 49erFX and Nacra 17 World Championships get underway in four weeks. © Richard Gladwell

Collinson FX: October 23, 2019 - Pound crashes after Vote

Markets were focused on the UK and Brexit. PM Boris Johnson has negotiated a deal to leave the EU, but the Parliament has voted the deal down in favour of further delay, so what happens next? Johnson refuses to delay and defer and wants an election and that is what is needed. The UK are thoroughly sick of the impasse and need to vote out the recalcitrant members of parliament. The GBP crashed to 1.2900, while the EUR trades back to 1.1100, amidst the chaos of indecision.

US markets improved, but the continued uncertainty from the UK and EU, does not add to business confidence. Commodity currencies have been beneficiaries of the US/China trade deal but the uncertainty from the UK and EU has dampened enthusiasm. The AUD struggled to hold 0.6850, while the NZD surge to 0.6400 is under serious question. All eyes remain on the UK and some solution to a problem that has plagued markets for more than three years. The US/China trade deal, ‘phase one’, looks to be growing in certainty as President Trump turns his guns on domestic politics.

Collinson FX: October 22, 2019 - Markets positive despite Brexit

Markets remained positive to begin the week, despite the UK Parliament refusing to even consider the Brexit deal of Boris Johnson. The UK Parliament remains decidedly ‘pro-remain’, disregarding the people, who advocate for Brexit. The breach of faith between the Government and the people will be rectified when the people are allowed to go to the polls. The Brexit deal may be considered this coming week and it may pass, in some distorted form? The GBP remains bid, trading just below 1.3000, while the EUR holds around 1.1150.

US Markets remain positive, as US officials continue to talk positive of the US/China trade deal. It appears the US will relax the nest tranche of tariffs, that the Chinese have demanded, so expectations are high the signing ceremony will proceed anon. The positive sentiment has allowed the trade exposed, commodity currencies, to benefit, with the NZD approaching 0.6400, while the AUD traded up to 0.6765. Markets will continue to monitor the progress of the Brexit deal and speculation surrounding the US/China trade deal.

Collinson FX: October 21, 2019 - Boost for NZD

Markets lost some of the shine from the weeks gains, which had been triggered by global confidence, arising from the progress on Brexit and US/China trade deal. UK PM Boris Johnson has successfully negotiated a Brexit agreement with the EU but a major obstacle remains. It must pass a ‘pro-Remain’ UK Parliament, which has failed many times, in the past under PM May. The GBP traded higher to 1.2940, boosted by the Brexit prospect, while the EUR pushed up to 1.1160. The Brexit plan failed over the weekend but the Tories will try again!

US markets gave up some of the weeks large gains, despite strong earnings and confidence that the US/China trade deal will proceed. Key Trump economic adviser, Larry Kudlow, said there was a ‘lot of momentum’ to get the deal done. Chinese GDP numbers fell to 6% p.a., a 27 year low, which did unsettle markets, although provides further incentives for the Chinese to execute phase one of the US/China trade deal and work towards settling a comprehensive deal. Commodity currencies continue to benefit the growing global confidence, over US/China Trade and the Brexit deal. The NZD jumped to 0.6380, boosted by a weaker reserve, while the AUD broke back above 0.6850. Speculation surrounding the US/China Trade Deal and Brexit will continue to dominate markets in the coming week.

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