FX Update: A rally in sterling
FX Update: A rally in sterling interrupted an otherwise directionally-limited London AM session in the forex market. The spark was the resignation announcement of Prime Minister May, who will step down on June 7th, after President Trump's three-day state visit. Cable sprang about 0.5% higher in posting a 1.2718 high, which extending a rebound from the near five-month low seen yesterday at 1.2605. Follow-through buying tapered out and the pound subsequently settled back in the upper 1.2600s, still nursing about a 4% loss from early May levels. The new leader will face unchanged political arithmetic: they will be the head of a weak minority government in a House of Commons that is deeply divided on Brexit. Elsewhere, the dollar, yen and Swiss franc have softened amid a hiatus in the risk-off theme that dominated markets yesterday. The narrow trade-weighted USD index ebbed to an eight-day low at 97.69, extending a quite steep correction from the 24-month high that was pegged at 98.37 yesterday. EUR-USD concurrently lifted to an eight-day high at 1.1205, up from the two-year low seen yesterday at 1.1107. The Canadian dollar found a toehold after its sharp concomitant drop with oil prices yesterday. This aided USD-CAD's ebb back toward the 1.3450 level after printing a high yesterday at 1.3502. WTI crude futures dove over 6.5% yesterday in making a 10-week low at $57.34, and have since lifted to around $58.50, which is still just over 7% down on the week. USD-JPY, after dropping over a big figure over the last two days on safe-have demand for the Japanese currency, settled to a narrow consolidation around the 109.50 mark.