Daily FX wrap: Early hit on GBP reversed as MP May takes over Tory reins. CAD weakness through 1.3100, but risk-on sees USD/JPY continue towards 103.00.
A busy Monday session, with JPY sales dominating in the wake of the PM Abe’s win in the upper house and subsequent plans to implement fresh stimulus measures. Strong gains in USD/JPY in particular, testing through 102.50, but gains slowing with 103.00-50 heavy with offers.
USD strength in evidence across the board, with cable sales taking the lead as talk of a potential rate cut at the MPC meeting this week. Spot fell back into the mid 1.2800s before finding support, and with Tory leadership contender Leadsom throwing in the towel, Theresa May has now been appointed, with a potentially earlier tenure now touted. Spot recovered through 1.2900, but there are plenty of sellers waiting above 1.3000, with stops above 1.3050 looking safe ahead of Thursday’s BoE meeting.
No respite for the CAD, pushing higher on every dip into the mid 1.3000s despite steady oil price and risk on, but eventually pushing through 1.3100 and 1.3120-25 highs. AUD losses have been capped at .7576 and NZD .7309, but price action suggesting further gains on the horizon.
EUR/USD is still finding support ahead of 1.1000, but as seen last week, 1.1100+ is equally well contained. Norwegian inflation was stronger than anticipated, giving the NOK a push higher, but gains soon contained vs the EUR.