The dollar is still on the back foot from Friday’s jobs report as this week gets started. However, the pound is rising higher off of news about a softer Brexit and the resignation of some of Theresa May’s cabinet members.
EUR/USD closes in on 1.18
The EUR/USD pair climbed higher Monday ahead of European Central Bank President Mario Draghi’s speech in front of European Parliament.
The pair is inching closer to 1.18 off of the U.S. dollar’s weakness from a mixed labor report on Friday.
Investors are looking to Draghi’s speech for clues on the ECB’s view on inflation, monetary policy and global trade.
The pound advanced Monday off of news that Prime Minister Theresa May’s cabinet had reached an agreement on a customs plan to present to the European Union.
After the announcement of the resignation of Brexit Secretary David Davis and two of his deputies late Sunday night, the pair dipped slightly. Dominic Raab, a younger Brexiter at 44 years old, was quickly named his replacement.
The overall outcome of the switch is pound positive and Theresa May seems to have made it out of the woods for now. GBP/USD is hovering just under 1.335, up from 1.327 late Sunday.
Of course, Brexit and May’s leadership is still on shaky ground, but for now she made it through another tough week. She is set to deliver her plan to the House of Commons Monday.
Waiting for the next trade-shoe to drop
Market reaction to the official implementation on Friday of tit-for-tat tariffs between the U.S. and China was limited.
Given all the worry leading up to the deadline, it’s a little surprising how dramatically investors ignored the change in trade landscape. Many market watchers could just be waiting for Trump to make his next move, after he promised to retaliate to any retaliation from Beijing.
European leaders met in Southern France over the weekend to determine their own response and how they can save the current global trade system despite efforts by the Trump administration.