Currency markets in doldrums

Currency markets range trade overnight

With the exceptions of the British pound, which continues to defy gravity on hopes of a Brexit agreement, currency markets contented themselves with directionless range trading. The US dollar index eased 0.14% to 93.40 in a non-descript session.

The story is much the same with regional Asian currencies, which are mostly unchanged this morning after the PBOC USD/CNY fix passed without incident. Protests and arrests in Bangkok have seen the THB fall by 0.14% versus the US dollar to 31.171, but a baht sell-off does not appear imminent.

Indonesia’s Balance of Trade at 1200 SGT should be rupiah support, with the surplus expected to rise to USD2.35 billion. Gains by the IDR will be limited though, as the Balance of Trade headline masks falling imports caused by very weak domestic demand.

Currency traders will need more patience yet, as a lack of concrete drivers for direction leave markets becalmed in range-trading mode.

The lack of activity in Asia is in sharp contrast to the situation in Europe, with the markets focusing on the Brexit talks. There has been a lot of noise about the UK’s self-imposed deadline for an agreement, which expires today. However, it seems that the British government will continue talking to the Europeans after today as well, as there is simply too much at stake for both sides. The markets are optimistic that a deal will be reached, even if it is a “slim” agreement which will have to be filled in next year. There are serious gaps between the positions put forward by London and Brussels, notably fishing rights and state aid programmes. However, both sides realize that an agreement is in their interest, so there is pressure on both sides of the Channel to finalize a divorce deal and move on.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific, from 2016 to August 2022
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley was OANDA’s Senior Market Analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV and Channel News Asia as well as in leading print publications such as The New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

Latest posts by Jeffrey Halley (see all)