This week starts with the usual themes of trade talks and Brexit making the headlines. President Trump described the trade deal reached thus far as being ‘very substantial’, but some analysts are seeing it as more of a temporary truce than a real deal.

The early reaction is for JPY pairs to move lower with USDJPY heading down to 108.20. On the Brexit front, doubts are cast on last week’s positivity as the clock ticks towards the October 31st deadline. GBP heads lower dropping from 1.2640 to 1.2555 initially.

As the US day gets going, GBP continues its drop south hitting a low of 1.2516 before a sudden reversal to 1.2600.

The traditional Queen’s speech to officially re-open the UK parliament ends up being more about pomp and circumstance than actual substance but provided enough relief to halt GBP’s slide.

US equities open marginally lower with the DJ down 70 points but climbs into positive territory before Europe heads home. The market is taking no news as good news as some in-depth information from the US-China trade talks is awaited.

The only headline of note suggested China wants another round of talks before signing phase one of the trade deal. However being a quasi-market holiday in the US, the markets shrugged it off with little reaction. And in fact, much of the rest of the US session would be quiet with USDJPY slowly moving back to 108.40 and GBPUSD drifting back off to 1.2560.

EURUSD is stuck between 1.1020 and 1.1030. Even XAU is reluctant to move far from 1492. US stocks end the day marginally in the red with the DJ closing down 29 points. Not the most exciting of days to start the week, but plenty more volatility ahead I’m sure.

On one of the quieter days in recent weeks, I want to take a look at EURUSD. The month of October has seen the 1.1000 level become pivotal. And why not? It is, after all, a psychological level and now has short-term technical significance.

Look for this level to act as support should we get a further dip and if we get a break, we could potentially see a sharp move through the level. Remember, everyone looks at the same thing and in the absence of any fresh news out of Europe, this level will be attracting plenty of attention.

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David Hannigan

A graduate of the Cass Business School, Dave's career began with Credit Suisse as an Equity Options Trader on the London Stock Exchange, before moving into the world of FX with Chemical Bank and Citibank. 1994 saw him join National Australia Bank, first as a Senior Dealer, then Senior Vice President and Chief Dealer.

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