By Han Tan, Market Analyst, ForexTime
Asian stocks are posting mixed results amid reports that the US and China cannot agree on the next meeting date to resume trade negotiations. Such headlines are reminding investors yet again of the tremendous gulf between the US and China in reconciling their differences over trade, leaving the global economy hanging in the balance. The recent slew of PMI readings from various economies only serve to highlight the ongoing slowdown in global economic activity, while further diminishing hope for a global economic rebound going into 2020.
Pound plummets ahead of UK Parliament clash of wills
The Pound is testing the 1.20 support level against the US Dollar at the time of writing, ahead of the UK Parliament reconvening today. Markets are digesting the headlines about a possible snap election in the UK, even as they brace themselves for the clash of wills that’s set to play out in Westminster this week starting today, given the reported attempt to block a no-deal Brexit.
Ultimately, the various political permutations will be judged on whether it raises or dilutes the chances of a no-deal Brexit, which has been deemed the worst-case scenario for the UK economy. Should investors get the sense that a no-deal Brexit can be averted, or at least delayed, that would offer relief for Sterling. Any perceived rise in the likelihood of the UK crashing out of the European Union without a deal should send the Pound lower. All things considered, the Pound remains on its slippery slope as investors continue to ditch the currency amidst the seemingly unending Brexit uncertainties.
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Dollar index breaches 99 mark as US non-farm payrolls await
The US Dollar is going from strength to strength, pushing higher past the 99.0 psychological level, as investors await Friday’s US non-farm payrolls report for August. Even though markets are already expecting another Fed rate cut later this month, the Dollar doesn’t appear dissuaded from its climb.
The Greenback’s resilience is buffered by the overall risk aversion in global markets, as well as the US economy that appears to be on better footing compared to the overall dismal outlook for major developed economies. Until risk appetite can claw its way back, there’re very few reasons for the Dollar to give up most of its gains over the near-term, barring an overt intervention in the US Dollar.
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