The British pound is tumbling across the board as a mixture of United Kingdom politics and currency weakness cause speculators to target the British currency.
Worryingly, the recent Tory resignations are causing market to believe a Conservative Party leadership challenge could be coming due to the incompetence of the PM.
Yesterday, British Health Secretary Sajid Javid resigned from Prime Minister Boris Johnson’s government, and then had news that the UK’s Finance Minister Rishi Sunak had resigned.
Traders now look to see the substance behind the leadership challenge and who will stay with British PM Johnson, and who will turn against him amidst heavyweight Javid and Sunak resigning.
Additionally, markets are clearly in a more optimistic mood after US stock were down by more than 2 percent yesterday and then bounced back into positive territory.
The backdrop behind this story is that falling bond yields are seen as being bullish for stocks, especially tech stock. The bond market doesn’t currently buy the 75-basis point hike at the next FED policy meeting.
Precious metals are taking their cue from the commodity space, meaning that they have not been able to recapture their losses from the week so far.
With tech stocks staging a recovery, crypto has seen a serious rebound. Crypto had a solid move higher, with Bitcoin trading towards a new monthly high after the $19,400 level held Tuesday’s decline.
Traders now look to ISM data, with Services and New jobs being the big releases to watch. Both the Services and Jobs release are expecting to come in soft.
Markets could be in somewhat of a limbo today ahead of the FOMC meeting minutes. Most FOMC minutes releases through in few surprises, however, the market respects the release enough to wait until the outcome. Therefore, it could be a relatively quiet day ahead.