Asia markets set to trade cautiously amid fresh uncertainties over Brexit

A pedestrian walks past an electronic stock board displaying a graph of the exchange rate of the yen against the U.S. dollar at a securities firm in Tokyo, Japan, on Thursday, Aug. 30, 2018.

Kiyoshi Ota | Bloomberg | Getty Images

Asia Pacific markets looked set to trade cautiously on Monday as Brexit developments over the weekend created further uncertainty over the United Kingdom's impending departure from the European Union.

Nikkei futures pointed to a flat open in Japan. Australia's ASX 200 dipped 0.34% in early trade, with most sectors declining.

The British pound changed hands at $1.2891, falling from an earlier level around $1.2958.

U.K. Prime Minister Boris Johnson was thwarted by a cross-party group of politicians in Parliament who voted to postpone the “meaningful vote” on his new Brexit deal. That forced Johnson to ask Brussels for an extension to the current October 31 departure deadline, but EU leaders don't necessarily have to accept it.

This week the British government will present the full Withdrawal Agreement Bill to try and pass it through both the upper and lower houses of Parliament. A decisive vote by lawmakers would likely come later in the week.

The pound “is likely to remain somewhat volatile, but supported, because it appears the chances of a hard (no deal) Brexit are very slim, and either another Brexit delay, or the ratification of the new Withdrawal Agreement in the U.K. House of Commons, will occur this week,” currency strategists at the Commonwealth Bank of Australia wrote in a morning note.

Elsewhere, the U.S. and China made ‘substantial progress' at trade talks, according to Chinese Vice Premier Liu He, Reuters reported. After reaching a partial trade deal earlier this month, Beijing and Washington are working to pen a written agreement.

The U.S. dollar traded at 97.380 against a basket of its peers, climbing from levels near 97.316. The Japanese yen, which is considered a safe-haven currency, traded at 108.40 per dollar, weakening from around 108.28, while the Australian dollar changed hands at $0.6847, a touch lower than an earlier high around $0.6855.

What's on tap

Here's the economic calendar for Wednesday (all times in HK/SIN):

7:50 a.m.: Japan exports and imports data

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9:30 a.m.: China loan prime rates

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