Brexit breakthrough and markets bet on the breakthrough in US-Ch

11 Okt 2019

There were no major breakthroughs at the meeting between UK Prime Minister Boris Johnson and his Irish counterpart Taoiseach Leo Varadkar over the Irish border backstop. Recall that today it is the main sticking point that stops signing an agreement with the EU. As a result, the GBPUSD soared more than 250 points.

However, this is not the end so you should not relax. Next week, the EU summit will take place, from which markets are waiting for a final decision on Brexit. Current options for the development of events include an agreement with the UK, another delay or exit without a deal.

We have been supporting pound purchases for a long time since we believe in Brexit deal.

Negotiations between the USA and China continued to be the hottest one. Trump said the talks went well. Today, Trump will host Liu He, Vice Premier of the State Council of the People's Republic of China, in the White House, so surges in volatility in the financial markets are still likely.

The markets seemed to be imbued with Trump's confidence, as demand for the Chinese yuan in the options market sharply increased (over the past 24 hours, traders bought two-month options in the dollar/yuan with a strike at 6.95 for $ 650 million). That is, traders are trying to prepare for the success of the negotiations and are waiting for the renminbi to strengthen.

trading decisions have to be made with an eye to a possible change in the existing fundamental background.

Regarding our position on safe-haven assets, today we will not recommend buying gold or the Japanese yen. The situation is too unpredictable, and the risks are too high. Our recommendation for today is the adaption to any negotiation outcome.

The success of negotiations between the United States and China, in theory, will be accompanied by haven assets sales. Accordingly, you can act respectively, with that. Yesterday, pound dynamics showed that even a late call could bring significant profits.

If negotiations fail, you can act respectively purchasing gold and the Japanese yen.

In terms of macroeconomic statistics, Employment Change in Canada is what we are interested in. So today is an interesting day to work the Canadian dollar.