Fragile risk sentiment weighing on stocks and commodities again; USD/JPY giving up 121.00 and AUD weighed. Oil-FX hit tame as yet. GBP gaining favour as dovish Thursday factored in.
Although a steady start to Monday, the overhang of the soft China manufacturing PMIs finally began to weigh on stocks; Europe relinquishing modest gains as US futures pointed to a negative start. Oil prices also slipped, though the impact on CAD and the rest of the related currencies was tame compared to recent episodes – though this gathered a little pace in EM later in the day – USD/MXN tipping 18.40. More significant moves were seen elsewhere, and GBP stood out after a heavy start to trade; focus is on Super Thursday and the prospect of growth/inflation forecasts being trimmed. This was slowly factored in, though the post UK manufacturing PMIs rally in cable was quickly beaten back. After a retest of 1.4300, soft equivalent US data sent the pair through the earlier highs, to extend beyond 1.4350, but 1.4400 elusive as yet. Gains against the EUR were limited as EUR/USD was pushing steadily higher through the day; taking out 1.0900 again. USD/JPY was well contained inside 121.00-50 for much of the day, but with pressure from heavy stocks, the lower end finally gave way, with US PMIs adding to losses. AUD trade was extremely tight through London, weighed by China and underperforming NZD.