Cable at 30-Year Low, RBA Next

Fears of month-end flows as the drivers of last week's moves dissipated as they continued at the start of the new week and month. CAD and AUD were the top performers while the pound lagged badly. The RBA decision is due up next. The Premium GBPUSD short was closed  at 1.3045 for a 245-pip gain. A new separate trade has just been posted ahead of the RBA decision. The Premium video will be uploaded momentarily after this post.

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The Brexit talk from Theresa May continued to drag down cable on Monday and it finished 130 pips lower on the day. Importantly, the sellers broke below the August low and the pair closed at the worst level since 1985. All the remains now in terms of support is the July intraday low of 1.2798 and it's less than a half-cent away. Expect stops if and when it's broken.

In terms of economic data to start the week, it was mixed. The ISM manufacturing index was at 51.3 compared to 50.3 expected. On the downside, August construction was at -0.7% compared to +0.3% along with a downward revision to July data.

The construction spending number led to negative revision to Q3 GDP estimates in another sign that 2016 may be the worst year for US growth since 2009. Add in the election uncertainty and potential for market turmoil in the aftermath and the chance of a Fed hike before year-end dwindles.

Still, the market is finding it difficult to get away from the US dollar. At the moment, the idea both candidates and parties will increase spending is gaining traction. That helped to push up Treasury yields Monday and underpinned a modest dollar bid in New York trading.

The RBA decision is next on the calendar at 0330 GMT. None of the 28 economists surveyed by Bloomberg foresee a move in rates and the market is pricing in just a 3% chance of a cut. Instead the focus is on the Nov and Dec meetings when there is a roughly 25% chance of lower rates priced in. The risk is that Lowe offers a less-dovish tone. His comments in Parliament suggest more of a focus on macroprudential policies rather than rate cuts. If that's confirmed, AUD could get a boost in the hours and days ahead.