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NY Open: May Day for dissidents?

Forex 4 minutes to read

Michael O’Neill

FX Trader, Loonieviews.net

Summary:  UK Prime Minister Theresa May could have the last laugh of the day after all with oddsmakers placing her chances of overcoming this evening's Conservative Party confidence vote at 86%.


May is still five months away, but disgruntled UK Conservative MPs may be soon shouting “May Day, May Day.” They forced a no-confidence vote on Prime Minister Theresa May and will quickly find out that their colleagues have no confidence in them. A Reuters article claimed that UK bookmakers suggest an 86% probability that May wins the vote. Sterling traders voted with their wallets. GBPUSD has risen from 1.2537 at the New York open to 1.2640 as of 14:00 GMT. However, GBPUSD needs to break above 1.2760 to negate the downward pressure.

The GBPUSD rally helped to turn the fortunes around for other beleaguered G10 major currencies. EURUSD climbed alongside Cable, rising from 1.1334 to 1.1364 in a move aided by soft, but as expected US November inflation data. (CPI actual 0.0% versus October's 0.3%, m/m). It has not, however, recouped losses from yesterday’s open. Traders are also trimming positions in case Mario Draghi chirps a tad hawkishly at tomorrow’s post-ECB press conference.

The Australian and Canadian dollars have scraped out gains since yesterday and added to them in New York trading. Both currencies are deriving support from a modestly better tone to the China/US trade talks. USDCAD was undermined by the pop in WTI oil prices overnight. However, they have since retreated, which may limit USDCAD losses.

Once again, Wall Street opened with a “pop.” The Dow Jones Industrial Average is up 1.73% as of 1415 GMT. The S&P 500 jumped 1.41%, and the Nasdaq surged 1.73%. Traders are hoping that this move has legs as morning gains have not been there at the closing bell.  So far, traders are ignoring the threat of a US government shutdown.
GBPUSD
GBPUSD (hourly, source: Saxo Bank)

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