- The GBP is the most energetic performer, so far
- Palladium at a 26-year high hit 1436$
- It is again a headline-light Asia session
US dollar has managed to climb higher against most of the G10 currencies on Thursday except Pound and Aussie dollar. US 10Yr TY up 2bps t0 2.75.
The pound rallied this week on developments on Brexit:
The pound has outperformed again overnight, rose more than a percent against most-traded currencies. So far, GBP outperformed more than 2.00% against G10 currencies, especially against CHF and USD rallied nearly 3.00% on the latest developments on Brexit as a greater probability of an extension to the 29 March Brexit deadline. Readers can remind that we have been recommending buying pound against EUR, JPY and USD.
Besides EURUSD and NZDUSD underperformed 1.00% and 0.20% respectively, so far this week.
On the data front, the euro area annual inflation rate was 1.6% in December 2018, down from 1.9% in November according to Eurostat estimates. Looking at the most recent set of data eurozone growth anchored to the downside risk.
Market traders are waiting for data clues, PMI surveys, German ZEW Economic Sentiment and German Ifo Business due next week. On top of these, ECB meeting due 23 Jan. We expect no material changes to the communication and forward guidance. Back in December 2018 meeting, the central bank remained comfortable with the growth outlook.
We also expect the ECB’s first rate hike signal after this summer is the key driver for EURUSD.
In commodities, Palladium hit 1436$, currently trading at a 26-year high.
A day ahead: It is again a headline-light Asia session.
Once again it will be quiet in terms of market-moving data releases, and that will leave investors’ primary focus on UK Retails sales and Canada CPI.
Chart of the day: AUDUSD, upside forecast
Despite the recent backdrop the cross manages to hold the 14MA which coincides with Jan 10 low. For trading perspective (1 day) trading resistance seems to be at 0.7235. Note that a break above could outperform to 0.7300 and even 0.7400 levels in the coming days. A daily close above 0.7250 could strengthen the 0.7400 forecast.
Supports are located at 0.7145 below here would underpin bearish momentum again, paying the way for a decline to 0.7100. Turning to daily indicators, they are signaling a breakout is imminent. However, note that AUDSUD largely cast on US-China trade developments. Furthermore, China GDP, Retail sales and IP due next week.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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