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*Good morning/afternoon everyone!*
Hope you all got some sleep because it was a very exciting night in the FX market. GBP dropped as low as 1.2636 but finds itself above 1.2750 at the start of the NY trading session. What happened? Prime Minister May’s party did not secure enough seats to maintain a strong majority and its looking like there could be a hung Parliament, leading to speculation of her resignation. Describing last night’s vote as a setback for May is a terrible understatement but GBP is NOT trading near its lows because she has negotiated to stay as PM for the time being. I posted a chart of how GBP/USD traded after the 2010 Election where there was also a hung Parliament and we can certainly see some parallels. GBP/USD recovered for 2 days before melting lower after a coalition government was formed. I would be careful of selling GBP/USD today as whatever move the pair has should continue on Monday but its a weekend so a deal could be announced so better to wait until Sunday open.
The euro remain under pressure after the ECB meeting and appears to be aiming for 1.1150. USD/JPY continues to rebound as yields rise but there’s a lot of resistance between 110.35 and 110.50. Commodity currencies ex CAD should be quiet as the upward momentum subsides
We have CAD labor data at 8:30 NY / 12:30 GMT. If its weak we should see 1.36
*The MAIN THEMES I see today are*
watch CAD after data
These will change after US data
neutral AUD, NZD
slightly bearish GBP
CAD – have to see data
*Today’s Potential Ideas*
Sell USDJPY at market (now 110.37), with a stop at 110.62, Target 110.07 (tightened stop – it either fails here or doesnt)
Sell EURUSD at market at 1.1175, stop at 1.1225, Target 1.1145