by Chris Becker
Some strange strange movements in the Australian dollar late in the overnight session, with a high 72-hand-to-USD peak – over 50 pips or a half – before a return in the early hours of the morning before Sydney opened.
What is it about? Usually, such movements may be eliminated at the end of the low volume of transactions, but this was an algo-based response to a series of news articles speculate that the US is considering a reduction in US tariffs on Chinese imports .
First from WSJ:
US officials are debating the rhythms of returning Chinese imports as a way to calm the markets and give Beijing an incentive to make deeper concessions in a trade battle that has affected global economies.
The idea of lifting all or some of the rates was proposed by Secretary of the Treasury, Steven Munchin, in a series of strategy meetings, according to people close to internal deliberations.
Wrong. US Treasury clarified a few minutes later on CNBC:
Neither Mnuchin Secretary, nor Ambassador Lighthizer made any recommendation to anyone on tariffs or other parts of negotiations with China
The real movement in overnight foreign exchange markets was the British Pound:
The Pound has grown in recent weeks, despite the volatility surrounding Brexit, because the prospect of a non-conforming understanding is becoming stronger. A much larger Pound against Euro will turn the nightmare Brexit into a double for British exporters.
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