• Global equities closed higher yesterday
  • EU Summit reached migration deal and caused risk recovery
  • Month-end flows likely to dominate today

US equities rose yesterday and their Asian counterparts also traded higher after China eased foreign investment limits. An early morning agreement at the EU Summit prompted a recovery in risk, causing safe havens JPY, USD and US Treasuries to decline, and EUR to rally overnight
The EU Summit leaders reached an agreement whereby new migrant centers will be set up in EU countries on a “voluntary” basis and restrict the movement of asylum seekers between EU states
EURUSD rose by 0.8% overnight and EURJPY gained 1% to the highest level since 14th June
Our traders expect EURUSD to be driven by month-end flows today and remain in a range of 1.1720-1.1500
GBPUSD traded in a relatively tight range yesterday and the EURUSD rally overnight had only a limited impact on GBPUSD. Today’s price action is likely to be driven by month-end flows, and focus also lies on the Q1 Final GDP print at 9.30
Looking ahead, this weekend will see Germany’s coalition talks on Sunday to discuss the outcomes of the EU Summit and could provide important signals for Chancellor Merkel’s prospects
Elsewhere, Mexico’s Presidential elections are held on Sunday, where Barclays Research sees risk of a strong AMLO victory, which may be perceived as highly negative by markets in the absence of counterbalances