by Nicholas Cork
European markets were rocked after Brexit secretary Raab resigned citing that the deal does not reconcile with the promises made to the country. The GBP wasted no time dropping to the weeks lows, with the Euro following later as the Italian budget deficit news was recycled. May’s ministers continued to resign throughout the day and the question is now will there be enough letters to force a leadership spill, with May vowing that she is ‘going to see this through’. The IMF fired a shot of sensibility when they warned that no deal would cost Britain 6% of GDP, and the Euro later recovered its losses into the NY session as Italy faded for the moment, but the GBP languished at its lows after the biggest sell off since June 2017. All this activity led to a very volatile night for AUDcrosses….
AUDUSD had already risen in our afternoon after better than expected employment data, testing towards 73 cents before the Raab resignation hit the London market and put a cap on the AUD ahead of 73 cents. AUDGBP and AUDEUR however continued skywards to trade at 3 and 5 month highs respectively near 0.6440 and 0.5700, offering much better value for buyers of those currencies than the last few months have. AUD and NZD are both sitting near three month highs against the USD to start the day.
Another round of US China “pre trade talk rumours” saw the Dow rally 200 points and put a floor under U K and European equities, aided by another round of better than expected US data. Watch out for headlines to further drive the market ….
Have a nice weekend
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