Pound surges as Brexit differences narrow, long bias drops further
Pound outperforms while the safe haven yen disappoints.
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.
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.
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.
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.
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.
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