Broader sentiment for yesterday’s session was skewed towards risk off. European markets traded cautiously but it was in the US that heavier losses were seen with the Dow down over .6% while the NASDAQ bucked the trend and closed higher on the day. Overnight sentiment remained cautious in Asia as major indices traded lower while the JPY was moderately firmer before a late USD rally helped USDJPY pop back higher above 107.00 .
GBP was the out-performer in trade yesterday as optimism on Brexit negotiations outweigh confirmation from PM May that officially the UK believe that Russia was responsible for the poisoning of an ex-Soviet double agent living in the UK. The attack on UK soil will once again put pressure on already strained relationships with Russia, and overnight comments from US Government would also suggest they support PM May’s view. So while that geo-political time bomb ticks away, markets chose to not worry and focus on the first of four days to resolve Brexit issues. News that the UK and EU were close to an “implementation process” resulted in GBP demand across the board. EURUSD traded slightly higher on the day, while EURGBP dropped back sub .8900 as .88495 marked the low of the day.
We mentioned yesterday that the economic calendar remain very light through the early part of this week and most of the attention will be on the US. The strong statement in the UK is not expected to drive too much GBP volatility and for the most part any basic European and UK fundamental data will likely be ignored while focus is on Brexit negotiations. That’s means that today’s CPI inflation report from the US will more than likely be the key focal point for the data traders and markets. US Inflation is expected to rise to 2.2%