The U.S. dollar is trading lower against all of the major currencies this morning with sterling and the Australian dollars leading the gains. There were 2 big political developments over the weekend — North Korea / U.S. tensions took a step back after an unnamed NK official described the talks as regrettable and accused the US of using gangster-like tactics to push for nuclear disarmament.
Interestingly enough, this had very little impact on currencies. Instead, it was Brexit Secretary David Davis’ surprise resignation that prompted wild swings in sterling. It dropped in Asian when the news was announced but recovered strongly in Europe on the hopes of a soft Brexit and the naming of his Dominic Raab as his replacement.
Yields are up across the board the board and equities are rising, pointing to a positive start to the North American session. With no U.S. economic reports on the calendar today, Brexit headlines and a speech by ECB President Draghi to the European Parliament will be the main focus this morning. EUR/USD is trading well, so less dovish comments could take the pair up to 1.18. With all of this in mind, Mondays are prone to reversals, especially for GBP and AUD which experienced strong moves overnight.
*The MAIN THEMES I see today are*
+EUR, +CAD, +AUD, +NZD
neutral CHF and GBP
*Today’s Initial Trades*
Here’s the summary —
1. Buy EURGBP at .8828, Stop at .8800, Target .8848
2. Buy CADCHF at .7557, Stop at .7529, Target .7577
Going with 2 trades and tighter targets since Mondays are always tricky
Close ALL open day trades by 10:20AM NY / 15:20 GMT