For now, a strong day for the dollar, which is making good movements against other major currencies. But I expect the session ahead to revolve mainly around the pound as the UK Parliament returns from its summer break and will vote to remove the no-deal Brexit from the table. This will force Boris Johnson to replace Clause 50 again, most likely by January 2020.
In general, this will probably lead to new elections, so expect BoJo’s majority to evaporate in such a turn of events. In addition, we remain focused on sentiment risk, as the US and China continue to have difficulty setting a date for trade talks in Washington this month.
For the moment, US stock futures are pointing up, and I expect Europe to start trading the same way. For the reasons outlined above, the session will maintain its cautious tone in anticipation of a catalyst to give direction to cash flows. The economic calendar does not provide much to market participants, so risk-sentiment remains the main actor.
Trader Aleksandar Kumanov