Market Drivers September 23, 2016

EZ PMIs slightly mixed
Johnson – Article 50 in 2017
Nikkei -0.32% Dax -0.19%
Oil $45/bbl
Gold $1340/oz.

Europe and Asia:
JPY Manufacturing PMI 50.3 vs. 49.3
EUR EZ PMI Manufacturing 52.6 vs. 51.5
EUR EZ PMI Services 52.1 vs. 52.8

North America:
CAD CPI 8:30
CAD Retail Sales 8:30

The dollar was mildly bid in on the last trading day of the week in generally quiet and lackluster Asian and early European session.

There was little on the economic docket to move prices with only Eurozone Flash PMI the only releases on record. The news from the region was mixed as the Manufacturing PMI improved to 52.6 from 51.5 but Services declined slightly to 52.1 from 52.8. Both gauges remains above the 50 boom/bust line but the expansion continues at a glacial pace as activity in the region remains muted.

The biggest loser of the night was cable which once again slipped below the key 1.3000 mark in the wake of comments by Foreign Minister Boris Johnson that UK could invoke article 50 as early as the first half of next year. Mr. Johnson was quickly reprimanded by the PMs office but the damage was done and cable gave way to a 90 pip loss by start of European morning trade.

Any talk of Brexit continues to roil the currency markets and with Europeans now seemingly eager to push UK to make a decision either way, the trigger of article 50 could happen sooner than PM May would like. The EU remains adamant about not negotiating any special deals with UK, in order to dissuade any other member from considering an exit from the union and there UK’s negotiating position remains weak. For now the market is at wary standstill, but if currency traders begin to believe that Article 50 is imminent cable will see much more severe downside pressure.

In North America today the US calendar is barren with only Canadian CPI and Retail Sales on the schedule. The buck remains in narrow ranges post FOMC as currency markets await the next string of economic data. With no meaningful US data until two week from now, we may remain in these tight trading ranges for a while.

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