Brexit Breakthrough Boosts Risk Appetite

USD Down on Dismal data

The US dollar was heavily lower over the European morning session today as equity prices jumped on fresh hopes around a Brexit deal which has also seen GBP rallying, weighing on USD.

USD index trades 97.43 last as price continues to sell off following weak domestic retail sales data yesterday which came in negative, marking its lowest reading of the last seven months. US rate cut expectations for October are now increasing, keeping USD pressured.

GBP Surges On Brexit Deal

GBPUSD has been sharply higher today on news that UK and EU leaders have agreed to a Brexit deal. While the terms of the deal have yet to be approved by the EU, which will decide on the deal at today’s summit, as well as the UK parliament, the market is clearly hopeful that a deal will pass. GBPUSD trades 1.2891 last having broken above the 61.8% retracement from 2019 highs.

EUR Breaks Above 1.11

EURUSD has been higher today also, taking advantage of a weaker USD while also boosted by hopes of a Brexit deal. A mutually-agreeable UK exit from the EU would help protect the EU economy from any further damage at this point. EURUSD is back above the 1.1025 level, trading 1.114 last, on its way back up to the 1.1217 level next.

Equities Rally on Brexit News

Risk assets received a firm boost today as news of a potential Brexit deal has helped calm some uncertainty among investors. While the US/China trade deal is yet to be signed, traders are for now focusing on positive news out of Europe which has seen UK and European equities climbing.

SPX500 has been higher today too, trading 30001 on the back of a string of positive earnings reports yesterday.

Safe Havens Sink

Safe havens have been lower today in light of the improved tone to risk appetite that we have seen following the Brexit deal announcement. While uncertainty remains regarding the US/China deal it seems that traders are happy to focus on good news at this point with both JPY and gold lower against USD. USDJPY trades 108.75 last, sitting just under the week’s highs. XAUUSD trades 1486.37 last, well below the 1522.75 level for now.

Oil Up On Better Risk

Oil prices have been a little firmer today, deriving some support from better risk appetite as a result of increased Brexit hopes. However, the outlook remains clouded for crude with uncertainty remaining over the US/China trade deal. Traders will get the latest EIA inventories report today which is expected to show a further build in crude stores which would increase concerns over the demand outlook for oil. Crude trades 53.23 last.

Crude Boosts CAD

USDCAD has been sharply lower today with price breaking down below the 1.3207 level and nearing the next support at the 1.3145 level. The weakness in USD, along with firmer crude prices, is keeping CAD supported here.

AUD Rallies on Data Beat

AUDUSD has been sharply higher today as a result of weakness in USD and improvements in risk appetite. AUD has also been bolstered by better data with the unemployment rate released overnight ticking down to 5.2% over September. AUDUSD trades .6829 last having broken above last week’s highs to trade its highest levels since mid-September.