EURUSD falls to 2-year low sub $1.10; Stocks dip after early gains

Summary:

• EURUSD falls below $1.10 to trade at 2-year low

• Pound set for mixed week despite Brexit headlines

• Stocks pullback into European close

• Dax and S&P500 were earlier near 1-month highs

• Nickel surges 7% on export ban

There’s been some strength in the US dollar in the last hour or so, with the EURUSD falling to its lowest level since May 2017 and in doing so dipping below the $1.10 mark. The declines came not long after Trump took to social media to bemoan the pair’s low level with the US president tweeting that the “Euro is dropping against the Dollar like crazy.”

The news flow this week has been dominated by Brexit, with the latest developments filling many column inches as Boris Johnson appears to have played his hand ahead of the return of MPs from their summer recess next week. The decision by the PM to prorogue parliament caused plenty of controversy and clearly toed the line as far as flouting the constitution goes, but in effect all it has done is shorten the timeline for those looking to prevent a no-deal Brexit. Intricate legalities surrounding the decision will be scrutinized in a forensic manner with Scottish courts scheduled to have a substantive hearing on the issue on Tuesday, but in all likelihood this won’t change the current state of play. Despite all the headlines, the pound is actually little changed on the week on the whole, falling lower against the USD but gaining against the Euro. 

Some strong gains in European stock benchmarks and US futures this morning have faded somewhat, with the US markets even turning red at the time of writing. A disappointing Uni Mich consumer sentiment number maybe contributed to the weakness while a sharp drop in the Oil price after Russia’s Novak said production in August was higher than pledged may also have played a role. On the whole though, barring any late fireworks it’s been a good week for equities that have recovered well after starting off on Sunday night very much on the backfoot. 

 Nickel continues its rally after Indonesia confirmed that the country will push ahead with a ban of exports of nickel ore from the end of December. The price of nickel broke important resistance zone above 16000 USD per tonne and is the highest since September 2014. Additionally, nickel stockpiles in Shanghai Exchanges dropped by 15% this week and global inventories are the lowest since 2013.