As Forex traders, volatility is the oxygen we need, and judging by the last 48h, the market has certainly strangled us by missing this critical component. On Monday, with the exceptions of the British Pound and the Canadian Dollar, the rest of the G8 FX complex traded in a rather ‘comatose’ state, even if that should not surprise nobody, as the US equity and bond markets were closed in observance of President’s day. In the first hours of trading in Asia this Tuesday, looks like vol is starting to return though.
The GBP was the weakest currency on Monday, as the UK’s Brexit negotiator David Frost reminded the market once again of the big stumbling blocks that lie ahead in the negotiations for future trading relationships with the EU. Britain said it will not sign up to follow EU standards because it would defeat the point of Brexit, while the EU maintains a hardline stance in ‘the level playing field’ that the UK must respect in accordance with EU laws. A rather bold yet representative statement of where they both stand came from the French foreign minister who warned of the tough EU-UK negotiations ahead by noting “EU-UK will rip each other apart” in trade talks.