Daily Morning Report 03.10.2016

Sterling hit seven-week lows on Monday after Britain set a March deadline to begin its exit from the European Union, while the dollar firmed as fears about Deutshe Bank receded and investors looked to this week’s U.S. jobs data.

British Prime Minister Theresa May said that she would trigger the process for the UK to leave the EU by the end of March.

May told the ruling Conservative party’s annual conference on Sunday that she was determined to move on with the process and win the “right deal”.

“The sterling low was hit this morning in very low liquidity, and there’s still two years to go before anything happens,” said Mitsuo Imaizumi, chief currency strategist at Daiwa Securities in Tokyo

Risk sentiment benefited from news that Deutsche Bank (DE:DBJGn) was attempting to negotiate a much smaller fine with the U.S. Department of Justice, though no formal settlement has been announced yet.

The DOJ fined Germany’s largest bank $14 billion earlier in September for what it alleged were sales of toxic mortgage-backed securities.

“I think the Deutsche headline risk is still there. It’s not finished yet, with many things yet to be revealed,” said Kaneo Ogino, director at foreign exchange research firm Global-info Co in Tokyo. “Cross your fingers that this rangebound trade continues.”

The dollar index, which tracks the greenback against a basket of six major rivals, inched 0.1% higher to 95.541 (DXY), off Friday’s more than one-week high of 95.960 but above Friday’s session low of 95.342.

Speculators boosted net longs on the U.S. dollar to their highest in six weeks in the week ended Sept. 27, according to Friday’s data from the Commodity Futures Trading Commission and Reuters calculations.

The value of the dollar’s net long position rose to $9.7 billion from $6.6 billion previously, the data showed.

A key focus for the dollar this week will be the U.S. non-farm payrolls report on Friday, which could cement or dash expectations that the U.S. Federal Reserve is on track to raise interest rates by the end of this year.

Australia’s central bank is widely expected to hold its cash rate at a record low of 1.5%, a Reuters poll of 57 economists found on Friday, following cuts in August and May.