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CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Pound surges as Brexit differences narrow, long bias drops further

Pound outperforms while the safe haven yen disappoints.

GBP Source: Bloomberg

EUR/USD: Outperforming against the dollar but not by a healthy margin

Economic sentiment figures out of ZEW (Zendrum fur Europaische Wirtschaftsforschung) showed ongoing contractions for both the Eurozone and its manufacturing powerhouse, Germany. Expectations weren't high to begin with given what has been mostly dismal data out of the bloc, but the net result for this pair's price was a swing back up on relatively positive Brexit news, as both pound and euro remain intertwined on the news but where the pound is experiencing far more volatility. As for today's economic calendar, final Consumer Price Index (CPI) figures are expected to show modest 0.9% growth. Out of the US, closely watched retail data following successive months of expansion and followed by other low-impacting data.

EURUSD Source: IG charts
EURUSD Source: IG charts

GBP/USD: It’s still all about Brexit as the pound outperformed significantly yesterday

The pound was the top performer yesterday amongst the FX majors, and by a very healthy margin, taking its price above its main 200-day moving average and lighting up its main technical indicators green. Overall focus remains on whether a Brexit deal can get done in time, but in the absence of any updates, there's been significant economic data out of the UK, with employment figures yesterday showing a rise in its unemployment rate and worse than expected wage growth. Up next today are Consumer Price Index (CPI) figures that as of late have been dropping, though focus is likely to remain on any fresh Brexit updates. Volatility may persist with the EU summit over the next two days and the market waiting on fresh Brexit news.

GBPUSD Source: IG charts
GBPUSD Source: IG charts

USD/JPY: Bullish moves in line with its current initializing bull trend technical overview

The yen was a clear underperformer amongst the FX majors yesterday, taking the pair’s price past its short-term resistance level and in line with its current bull trend technical overview. A lack of Japanese data this morning (and tomorrow) has meant that risk appetite has been a larger determinant for the safe haven yen, and with earnings season it's likelier that we'll see more flows in that regard. Otherwise, with the Asian session nearly out of the way, focus will be on US data later in the evening to see if retail consumption can aid the US economy following what has been contractions in manufacturing.

USDJPY Source: IG charts
USDJPY Source: IG charts

USD/CAD: Canadian dollar second-best despite oil price dip

The Canadian dollar was the second-best performer amongst the FX majors yesterday despite oil prices dipping slightly, keeping its price below its 100-day moving average even if a positive Direction Movement Index (DMI) cross occurred. Today's Canadian Consumer Price Index (CPI) figures will be closely watched following better than expected employment figures last Friday that aided the commodity currency in finishing higher against the greenback, and hence pushing USD/CAD's price lower by last week's closing. Expectations aren't higher this time around however, with monthly CPI set to show another contraction following last month's -0.1% reading. Its energy underlying may also be affected later in the evening on American Petroleum Institute's (API) release. Given CPI figures will be released at the same time as US retail data, any significant contrast in the two could give a tad bit more volatility to this pair's price.

USDCAD Source: IG charts
USDCAD Source: IG charts

AUD/USD: Employment figures released tomorrow, Australian dollar suffering in the meantime

Even if its only light data this morning ahead of important employment figures tomorrow, it hasn’t prevented the pair’s price from dropping further following Monday's drop on trade optimism waning. As it stands, the technical overview remains consolidatory and where the conflicting technicals short short-term bullish bias brushing up against long-term bearish forces, where its weekly bear trend channel still holds, and its price is failing to stay above its 50-day moving average. Retail heavy long bias has risen 3% to 71% as fresh shorts pull out.

AUDUSD Source: IG charts
AUDUSD Source: IG charts

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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