EURGBP Rallies on Uncertain Brexit Prospect
The pound sterling’s latest rebound could be short-lived for the lack of new development on the Brexit front. Unexpected cancellation of last Friday’s talks could only put fresh strain on an already tight schedule.
As both parties meet up this week, the prospect of resolving their differences seem to be rather dim. Traders can expect short-term volatility at the UK’s GDP release. Unless there is substance to the trade deal with the EU, Sterling is likely to underperform in the coming days.
The euro is supported by the trend line above 0.8950 and is positioned to rally to the previous high above 0.9400.
AUDJPY Rises Amid Bullish Commodity Prices
Regardless of news of a potential second wave of COVID, the Australian dollar’s V-shaped recovery is a testimony that there is firm optimism that the world’s economy might have bottomed out.
Rising prices of iron ore and copper, supported by returning Chinese demand, have contributed to a recovery in Australia’s trade balance. The combination of reopening and bullish commodity markets offer the Aussie a lead against less growth-sensitive currencies.
The pair has found solid buying interests along the 30-day moving average above 72.50. The recent top of 76.60 is the next target in sight.
USDCHF Drifts Lower on Virus Surge
Record surge in new infections in the US is posing a serious challenge to the much-anticipated economic recovery. So much so, that the latest uptick in employment was received with mild enthusiasm. 4.8 million new jobs were added against a consensus of 3 million, though the back-pedaling on reopening across several states dampened hopes of a definite U-turn.
As a result, the greenback is likely to stay muted against its safer Swiss counterpart as investors stick with a cautious mind. The US dollar is heading toward 0.9250. Any meaningful rebound will need to lift the key resistance of 0.9650 first.
CADJPY Inches Higher on Improved Sentiment
The Canadian dollar is trying to catch its breath after a stellar recovery against the Japanese yen back in June. Overall, market sentiment has improved since, and that could argue for a continuation of the bullish reversal.
Prices of oil, Canada’s biggest export, have been grinding higher and offer a strong positive correlation to the movement. Should Friday’s jobs data paint a less-than-gloomy economic picture, as last week’s GDP number did, the Loonie may see more of the upside in the coming days.
As long as the pair stays above 78.00 the bullish bias stays. 81.80 is a key resistance to lift for an extended reversal.