FX Update: The dollar majors have been plying narrow ranges
FX Update: The dollar majors have been plying narrow ranges in early-week trading so far, with principal pairings and associated cross rates showing less than a 0.2% net movement heading into the London interbank open. EUR-USD settled in the upper 1.1100s. The pair was lifted on Friday from levels around 1.1170 by reports that Germany will shift to deficit spending should the country enter recession. EUR-JPY has similarly consolidated Friday's euro-driven lift; ditto for other euro crosses. The yen has been lacking directional impulse, and was unaffected by data showing a slower rate of decline than expected in Japanese export data in July; USD-JPY has seen about a 20-pip chop around the 106.35-40 zone, holding well within ranges seen last week. The pound, after posting a rare up week last week, has started the new week by posting modest gains, despite the Sunday Times leaking a government document detailing the impact of a no-deal Brexit on the UK economy, which warned of food and medicine shortages, among other potential horrors. Cable printed a high at 1.2171, which is 3 pips shy of the 11-day peak seen on Friday. The market appears to have found an equilibrium of shorts with regard to the pound. While the advent of Boris Johnson becoming prime minister has increased the odds for there being a disorderly no-deal exit of the UK from the EU, it still remains far from being a certainty, and a phase of high drama looms, which will commence when parliament returns from summer recess on September 3. Stock markets in Asia and S&P 500 futures have been in rally mode, with expectations for stimulus presently outweighing fears of recession in some major global economies.