Flash Crash In GBP/USD
A long and rather strange week is coming to an end with the main story being the weakness that has remained in the US dollar following the latest round of allegations to hit the White House about the president’s ties to Russia through his advisors.
Overnight the yen has continued to strengthen from risk-off reserve flows following an incident between a Chinese fighter jet and a US surveillance aircraft over the South China Sea. Elsewhere markets have calmed down although GBP/USD plunged lower late last night in a seeming ‘flash crash’ before regaining some poise. There is little reason for the move to be honest and while GBP/USD now finds itself below the 1.30 level there is not much momentum to re-test recent lows.
Conservative Manifesto Makes Hard Brexit A Policy
Yesterday’s publication of the Conservative manifesto rounds out the publications from the three main political parties in this election. On the matter of Brexit it was overwhelming obvious that the central position of the May government within the negotiations is to opt for a ‘hard Brexit’ as characterised by a focus on immigration control and a commitment to leave the single market and the customs union.
We have known that this was the most likely option for a number of months however its entry into the manifesto – which are rightly or wrongly treated as gospel once the election is over – limits the ability for parliament to challenge this. For a Conservative manifesto it was strangely absent of detail on costings and revenues whereas both Labour and the Lib Dems have been at pains to show off just how fiscally prudent they can be.
The latest polls have shown a slight softening of the Conservative party lead over the Labour party but even if the British pollster are wrong by 12 points, Theresa May would still win on June 8th by 5 or so percent.
Elsewhere
Other than that, prices have taken the Friday morning off in Asia and there is the very real possibility that something similar will happen in European trade. Some noises from Fed speakers last night and tonight could allow for some USD movement but they are likely to keep their own counsel over the impact of another part of Washington on theirs.