There is another surge of optimism in the markets due to optimistic news on trade negotiations. Representatives from both the United States and China confirmed that the parties agreed on a new round of trade talks in Washington in early October. Before that, in mid-September, working meetings of the teams of trade negotiators will be held, aimed at “laying the foundations for tangible progress”.
This triggered a weakening of defensive assets, including the yen and gold. Gold fell back to 1540. USD / JPY jumped by almost 40 pct. to 2-week highs at 106.75, US stock futures and treasury yields also went up. AUD / USD broke above 0.68.
USD / CAD continued to consolidate above 1.32, where it ended yesterday as a result of a favorable combination of two factors at once: oil prices aggressively strengthened by 4%, and the Bank of Canada didn’t show an active pigeon mood.
Meanwhile, the British parliament rejected Prime Minister B. Johnson’s proposal for an early election. Johnson received in his support only 298 of the required 434 votes. Parliamentarians want to first pass a bill empowering them to block Brexit without a deal. Yesterday, the House of Commons approved the draft law by a majority vote, and now it has gone to the house of Lords. The legislation is expected to be completed on Friday. GBP / USD against this background continues to hold steady around 1.2250.