Intraday Market Thoughts

Brexit Ticks Away, Loonie & ECB

by Adam Button
Jan 23, 2019 22:43

Brexit hardliners are growing more nervous amid falling prospects of a no-deal Brexit. The pound is sensing an opening for a deal with cable gaining more than a cent Wednesday and leading the way while the yen lagged. The Premium long in GBPUSD was closed for a 200-pip gain. A new trade in commodities was issued. Australian employment is up next. The ECB conference is on Thursday 13:30 GMT - Since the ECB is not expected to issue new forecasts until the March meeting, euro bulls look out for any pessimism in the ECB statement and Draghi's conference when refering to the balance of economic risks. (more below).

تداول حول فنيات الزخم و الدعم الإتجاهي (فيديو للمشتركين)

January 29th vote

A bill to take a no-deal Brexit off the table gained momentum Wednesday and the pound gained along with it. In addition to the solid earnings and employment figures, the Brexit dynamics remain positive. The Boles-Cooper bill -- aimed delaying Brexit if no new agreement is reached by February 26th -- will be voted on next Tuesday (29th) and is highly likely to be passed.

Cable rose to a two-and-a-half month high of 1.3081 on signs the dreaded option could be eliminated. Jacob Rees-Mogg called for Parliament to be prorogued rather than allowing the bill to pass, but Boris Johnson hinted he could support May's deal if it's renegotiated. On that front, the EU continues to brush off the possibility of a hard timeline on the Irish border.

Technically, cable touched slightly above the 200-day moving average. If it can hold, little separates it from the November high of 1.3175.

Elsewhere the Canadian dollar hit a 2-week low after retail sales fell 0.9% in November compared to -0.6% expected. Combined with recent misses in trade and wholesale data, there is a growing risk that next week's GDP report will confirm a deep slowdown in Q4. USDCAD attempts to regain the 55-DMA of 1.3360s.  Oil support stands at 50.00

On the flipside, CAD and oil could be propped higher if Venezuela situation deteriorates further. The US and many Latam nations recognized Juan Guiado as the interim leader on Wednesday and talk of a US halt on Venezuelan oil imports continues to do the rounds. The days ahead will be extremely delicate.

Here is our IMT analysis from last month's ECB press coference/revision.

Looking at the calendar, Australian employment data is due at 0030 GMT and is likely to be a market mover. The consensus is for 18.0K jobs with unemployment steady at 5.1%.

Act Exp Prev GMT
Core Retail Sales (m/m)
-0.6% -0.4% -0.2% Jan 23 13:30
Employment Change
17.3K 37.0K Jan 24 0:30

Latest IMTs