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Boris ready to “move on” from Brexit

AUD/JPY – Daily Candlesticks
Source: GKFX / MT4 (September 7, 2020)

AUD/JPY breached resistance at 76.5, ran 200 pips higher and is now back testing the level, which held as resistance for 16-months. If it holds, it opens up a new longer term period of strength, whereas move back below suggests a fakeout and lower prices to come.
 

TAKEAWAYS


•    British pound drops after No Deal Brexit risks re-emerge
•    SMIC shares crash 23% over risk of US blacklisting the company
•    Sanofi / GSK vaccine would cost less than 10 euros
•    DAY AHEAD: Germany trade data, Eurozone GDP, Slack earnings
 

MARKETS


Wall Street was closed for Labour Day on Monday, which allowed for a recovery in European indices from last week’s sell-off. Automakers were among the top gainers as buoyed by reopening hopes amid coronavirus vaccine hopes. The President of Sanofi said that his company’s joint coronavirus vaccine with GlaxoSmithKline would cost less than 10 euros. The FTSE 100 got an extra boost from weakness in the pound. 

Markets in Asia didn’t fare as well, playing catch-up with the late declines on Wall Street with fresh concerns about US-China trade ties after the US Defence Department said China’s biggest chipmaker SMIC could be blacklisted.

The US dollar edged higher in a low-volatility trading session, while the pound was top faller. Gold and silver prices were little changed while oil fell to a fresh one-month low.
 

GBP: Move on


Sterling dropped on Monday after UK Prime Minister restated a deadline of October 15 for a post-Brexit free trade agreement to be reached with the European Union, after which the UK and EU should just ‘move on’. 

At the same time the Financial Times reports the UK is preparing new piece of legislation dubbed the ‘internal market bill’ that would alter the arrangements made under the EU Withdrawal agreement to mean no customs checks between the UK and Northern Ireland and a change to state aid policy. The new moves come ahead of another round of negotiations this week.
 

SMIC slump


Shares in Semiconductor Manufactutring International Corporation lost almost a quarter of their value on Monday amid talks of a possible ban from dealing with US companies. SMIC needs parts made from USmade semiconductor tools for its manufacturing. The news comes as the grace period for US companies to stop dealing with Chinese chipmaker Huawei ends on September 15. The new US policy approach is becoming a real headwind to Chinese tech stocks.
 

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